A report published towards the end of January by the International Longevity Centre, a leading think tank on longevity and demographic change, announced that 70% of over-55s surveyed would prefer their pension to deliver a guaranteed income for life.
However, with the report also highlighting a worrying lack of planning, even by those just months away from retirement, generating a guaranteed income for life using the new pension reforms could be challenging without the right guidance and preparation.
According to Ros Altmann, the government's business champion for older workers "Even after decades of pension saving, many people have no understanding of the most important aspects of the pension system, which leaves them at risk of making poor decisions,"
From April 2015, savers will be able to access their pensions as they wish during retirement rather than purchasing an annuity. The opportunity of more freedom and choice has the potential to deliver better value for the over-55s who are looking to make the most of their retirement pot. However, more alarming research from Scottish Widows suggests that short-term financial needs are outweighing the long-term goal of providing a decent income later in life, with 1 in 5 expected to use their pensions to pay for care costs of elderly relatives or invest in property for children.
With the changes to the UK pension industry looming, receiving the right guidance and advice is crucial.
Last month, the government confirmed that the guidance for people negotiating the new retirement freedoms will be called Pension Wise, a free service from the Pensions Advisory Service and the Citizen's Advice Bureaux. As we have previously mentioned, the service will only provide guidance and not tailored advice. Once an individual has received their free guidance from Pension Wise, the next step would be to speak to a Financial Adviser who is qualified and regulated by the Financial Conduct Authority, which ensures consumers are receiving up-to-date knowledge from firms they can trust.
If you're retiring in the near future, it is essential that you seek tailored financial advice to not only inform you of the possible tax implications but also ensure that your pension provides you with an income for the rest of your life.
If you have any questions about the latest pension reforms and would like to speak to a Financial Adviser, contact Retirement and Investment Solutions on 01489 878300.