Article by Phil
It’s increasingly important to make sure you’ve had a pension review to make sure you can meet your retirement goals.
A recent survey by Rathbones has found that a third of parents said they had put off their retirement in order to support their children through university. On average they are paying £7,200 a year to provide the support. Including paying for tuition fees, accommodation and other living expenses. It gets worse. Over 50% said that they had continued to provide their children financial support after they have finished uni.
- 63% have cashed in their savings to cover the costs.
- 30% have cashed in investments.
- 17% have borrowed on cards to pay, whilst.
- 13% have re-mortgaged.
Having a pension review is important in these circumstances to understand the impact of paying the extra costs will have on retirement plans.
Pension withdrawals
Dipping into pension pots is also on the rise, with almost 1 million people accessing their pensions for the first time last year. But according to the Financial Conduct Authority (FCA), only 45% of people took some kind of financial advice before taking money out of their pensions. Something the FCA does not recommend.
Almost 40% of people are taking their tax-free pension lump sums out as soon as its available to them, according to Aegon. Even though most have no idea what to do with it.
- 19% used the money to pay off their debts or mortgage.
- But 11% have just put the money into a cash savings account.
- 25% have left it invested.
- 10% have used the money to finance their living costs and a small number used the money for a one-off holiday.
Inheritance part of retirement plans
According to Hargreaves Lansdown 32% of people are relying on an inheritance in order to be able to retire comfortably. Only 44% said that they would not need any funds from inheritance.
But as we’ve looked at before, over 33% of people have no idea what their parents’ inheritance tax plans are,
Inheritance from pensions is also set to be subject to inheritance tax (IHT) from 2027, so that will need to be taken into consideration. According to Transact, they estimate that the number of estates subject to IHT will increase from 1.6 million to over 5 million. With the assets subject to tax rising to almost £2 trillion. The government is trying to play the numbers down and paint a picture that only the rich pay IHT. That’s simply not true. Another good reason to consider a pension review.
Benefits of a Pension Review
A pension review would consider all your finances in order to be able provide holistic advice. This would include speaking to both partners. This is important because Barclays published figures showing that people are now holding over £600 billion in cash savings rather than investments. That figure has increased by 30% over the last two years alone. People clearly need more education about the advantages of investing, or to get more confidence.
Female financial advisers in demand
In their Women and Wealth Report, Unbiased found that women are increasingly looking for female financial adviser to conduct their pension review. They found that those looking for a review would on average be 56 years old, have £160,000 in assets and likely to be married. Women over 70 had £472,000 in assets by comparison.
Find out how much your pension is worth.
One of the benefits of a free pension review is that you will find out how much your pension is worth alongside details of your pension benefits.
It’s amazing how many people don’t have this information. According to Standard Life 47% of adults don’t know how much their pension is worth. This varies by age group:
- 68% of over 80’s have no idea.
- 52% of those between 60 and 80
- 43% of 45- to 60-year-olds
- 38% of 28- to 45-year-olds
Only 20% think that they have saved enough for their retirement.
Avoiding fraud
Reports of scams don’t help of course. The Investment Association reports that £2.7 million was lost last year to cloning scams for example. This is where a scammer creates a website with an address almost identical to a real financial services company. Probably also re-creating their logo and branding. This can also be done through WhatsApp. Tips to avoid being caught include:
- Double checking e mail addresses and website addresses to make sure they are genuine.
- Ask yourself – could this be a scam. Take the time to think before acting.
- Double check the FCA Register and check if the information matches. Web address, address and contact numbers for example.
If you are caught out Action Fraud can help.
Get more information.
If you need a pension review then why not contact Christina today. We offer a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
