Why should I get advice on pension?

 Pensions have arguably become more complicated over the last few years with various ways to access your money and greater personal responsibility in making your savings last. Seeking advice or guidance can often be a good idea as you approach retirement. 

But how much does it cost? And where can you get advice you can trust? This guide outlines the different pension advice services available and highlights how much you might be charged to plan your retirement with an adviser.

When should I get pension advice?

General retirement issues People are increasingly seeking out advice to help them make their general retirement decisions following the introduction of the pension freedoms in 2015. If you need help in choosing a pension, or reviewing your retirement options, an independent financial adviser (IFA) may be able to help. IFAs are authorised to give you advice and recommend suitable pensions products and investment options. Many advisers will offer ongoing reviews to ensure that your finances stay on track throughout your retirement.

Arranging pension drawdown

An increasing number of people are opting for pension or income drawdown at retirement. Your retirement savings remain invested in funds specifically designed and managed for this purpose, and you might need some assistance if you have limited experience of investments. Many pension providers will require you to get independent financial advice before they’ll accept you as a new pension drawdown customer and some will expect the same of existing customers. Getting financial advice before drawdown is important as it will help you to identify providers who might offer you the product you require. You'll find out more about how much they will charge you and the pros and cons of making such a transfer based on your own personal circumstances. 

Is financial advice mandatory for pensions?

Since 2015, there has been a legal requirement that transfers from defined benefit or final salary pensions worth more than £30,000 need to be signed off by a financial adviser. This rule is there to protect you and make sure you’re aware of all the pros and cons of transferring. There's an advantage in this, because if things do go badly following poor advice about a transfer, you’ll be able to use the complaints and compensation schemes available. There have been some high-profile examples of people transferring out of defined benefit schemes following unsuitable advice. The Work & Pensions Committee has proposed that advisers continue to start from the presumption that a final salary pension transfer is a ‘bad idea’ for their client. Seeking the help of a reputable adviser is essential if you’re considering giving up the substantial benefits and guaranteed income offered by a final salary scheme. 

Where should I go for pension advice?

An independent financial adviser For complex products, such as pensions and investments, getting expert advice can be crucial, so that you don't end up with something unsuitable. That's where a financial adviser comes in. Many financial advisers will offer you an initial meeting, free of charge. These meetings can be useful to help you decide whether they can provide you with the services that you need and, that you will be happy to work with them. A financial adviser can scour the market to find products that are tailored to your circumstances, and help you personally plan for the things you want to do with your money in the future. If the adviser is a ‘tied’ or ‘restricted’ adviser, they can only offer you products from one product provider, or a small number of providers. Financial advisers are regulated by the Financial Conduct Authority (FCA) and have a strict code of conduct and rules to stick to.

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