Pensions, Investments and Retirement Planning
Understanding Personal Pensions and Their Benefits
The basic idea behind personal pensions is straightforward: you contribute money throughout your working life, which is then invested by your pension provider or directly by you in the case of self-invested personal pensions (SIPPs). Upon retirement, the investment returns are used to provide you with an income.
One key advantage of investing through a pension fund rather than directly in the stock market is the potential for tax benefits. Previously, savers were required to use most of their pension funds to purchase an annuity, a guaranteed income for life. While annuities offered financial security, they came with limitations. Since April 2015, however, pension freedoms have given savers much more flexibility in how they use their pension pots, including the ability to leave the remaining fund as part of their estate.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
FAQ'S
Flexibility and Responsibility in Managing Personal Pensions
The introduction of pension freedoms allows for greater customisation, enabling savers to adapt their retirement funds to their evolving financial needs over potentially decades of retirement. However, this increased flexibility also brings greater responsibility. Savers must educate themselves or seek professional advice to ensure they make informed decisions about managing their pensions effectively.
It is also important to note that personal pensions are distinct from workplace pensions, although employers can voluntarily contribute to them. For individuals unable or unwilling to join an auto-enrolment scheme, discussing the possibility of employer contributions to a personal pension could be a viable alternative, though this is at the employer’s discretion.
Vulnerable Customer
We understand that from time to time our clients may find themselves dealing with circumstances which could mean they are potentially vulnerable. For example, a change in health, caring for a family member or coping with the loss of a loved one. There are many different types of vulnerability, and what makes one person vulnerable might not affect someone else. When we are vulnerable, our need for financial advice may change. However, admitting vulnerability or seeking help can sometimes feel hard.
If this is something you would like to discuss with us, please ask for a copy of our support guide or download a copy here. This guide is designed to help explain vulnerability and the ways in which we might be able to support you. If you feel any of the circumstances in the brochure apply to you, please talk to us.
