Why Do I Need Pensions Advice?
A recent survey undertaken by money.co.uk found that 59% of people over 55 felt they did not need financial advice for retirement, with 28% believing it was a waste of money. (The original press release is at http://www.money.co.uk/press/half-of-those-making-pension-freedom-withdrawals-will-not-pay-for-advice.htm).
As a financial adviser this depresses me as it suggests that we are not getting a clear message over to the public. As only 1 in 5 of the respondents will even talk to Pension Wise, (which is free), I would suggest that the bulk of the population are in Cloud-Cuckoo Land where it comes to the complexity of pension planning.
Take simple issues like taxation and the new pension freedoms; a fund of £50,000 will be worth in your hand about £44,620 if you had no other income in the tax year 2015/16 or as little as £33,125 if you were already a higher rate taxpayer. If you took advice and spread your money over a few years it would be fairly easy to pay no tax at all, if your total taxable income was limited to the personal allowance each year.
I have met too many people who do not understand the consequences of their actions, compartmentalising savings, pension and debt and not seeing the situation in the round. It is not uncommon to meet prospective clients who have £25,000 in the bank in a deposit account, getting 1% as interest with a £10,000 balance on a credit card at 27.5%APR. They do not understand, without heavy prompting, that paying off the credit card from the savings would save them £2,650 in interest charges every year, even after the loss of interest on the £10,000 spent.
Retirement is a complex problem, with difficult choices to make at regular intervals. The new workplace pension schemes are a simplifying measure but the basic level of contribution from age 22 will be wholly inadequate for a well funded retirement, even on the Money Advice Service’s own figures.
Current retirement outcomes in the UK are not satisfactory as many pensioners are living at or below the poverty line, so I suggest that the 59% of the over 55s are sadly mistaken. If, at retirement, you have no more pension provision than the basic State pension then financial advice would be a waste of money, as there is nothing we can do for you: it is too late! For anyone who wishes to ensure more than a subsistence level pension, we can do more for you than anyone else.
£2 a week on the National Lottery is not a pension plan; it is a measure of desperation. A workplace pension scheme is a good start, but there is no substitute for following good advice for life.
Contact me with queries
If anyone is looking for general advice, then please write in to the blog and I would be happy to help with anonymous advice posted here. Alternatively, please call us on 0116 253 5600 and ask to speak to an IFA, (Independent Financial Adviser), for a no-obligation discussion.
If you know you need formal advice, have a look at http://bankfield.net/personal/retirement-planning/, or ask around for a recommendation, it might even be me.