The new pension freedoms provide greater choice, greater flexibility and more opportunities to access their funds in the way which suits their lives.

For many of us, and especially if we’re over 55, the changes are pretty positive.

However the new rules do mean that if you’re in a position where the rules impact you either immediately or relatively soon there are some things you need to be careful of.

Today I want to talk about three of these issues…

Encountering “Mr Unscrupulous”

Recently we’ve hear about a few (em, how do I put this politely) unscrupulous individuals try to take advantage of the news about pension reforms to peddle frankly downright dodgy deals which whilst initially looking attractive are only good for one thing…

Quickly reducing your wealth.

Encountering “Mr Unscrupulous” usually starts with a telephone call.

Usually a ‘cold call’ you’re not expecting (a massive warning sign).

Mr Unscrupulous will talk about the new freedoms opening up ‘great new investment opportunities’ or ‘releasing your pension early’ (something you need to avoid especially if you’re under 55!).

He’ll then might tell you the next ‘big thing’ is an investment in an hotel on a Caribbean island, or that rainforests in South America is the next big thing. He might even tell you about a way to transfer your pensions abroad allows quicker access to the cash.

He might even send you a glossy looking brochure and point you to a flash looking website.

However here’s the truth..

Whilst the life you lead should be exciting, broad and diverse how you achieve this life by investing your money is relatively boring!

The best way to not fall foul of the scammers is to give ‘Mr unscrupulous’ a short shrift and seek advice from a fully qualified regulated financial planner who can help you make decisions which are right for you.

Decisions which might not be glamorous, but will help get you closer to the life you want to live in the future.

However as our lives are now much longer than they used to be there’s also something the new pension reforms enable but you need to be careful about our 2nd which is…

How to make it last-itis

One of the main factors of the pension reforms is the ability to access the money you’ve accumulated when you need it. Whilst there’s a decent number of factors to consider, including the tax implications, any guarantees you might lose on old schemes and quite a few more the question we’re getting asked (more than any other) is this…

“How can I make sure the pot of money I’ve accumulated last as long as possible?”

You see whilst the pension reform gives more accessibility on our funds than ever before the challenge of entering the stage of our life where we might choose to do less paid work remains…

Making the money you’ve worked so hard saving over the years to live the life you deserve but also last as long as possible.

Whilst for many it’s possible to be able to do this yourself we find that many find the support of a professional financial planner incredibly useful. Often we’re so close to our own lives, financial and otherwise we need an impartial, independent perspective to help us find the answers to some fundamental questions.

For example…

What does your ideal ‘retired’ life look like? Does it include travel, continued work or something else?

Can you afford to spend more money in the early years of your retirement whilst maintaining your lifestyle longer term?

and

Should you continue to work, either because you enjoy it or you need to be in a better financial position before you start to reduce your hours?

As I’ve already mentioned these questions (and many more) can very often be made easier with support from a professional. What can happen without support is indecision, which brings me onto my third point…

Pension Payarlysis

Sometimes when we’ve worked hard throughout our lives and accumulated wealth making big decisions is tough.

Whilst the pension freedoms give us way more choice there’s a downside to this…

Too much flexibility.

Whilst flexibility gives us freedom it also gives us a lot more decisions to make and a lot more factors to consider when compared to the choices we used to have to make with our accumulated pension pots.

The danger, and one all too common in so many aspects of our lives, is too much choice and too many decisions might mean we avoid making decisions or alternatively go for the easy option.

Again this is where a professional can help.

By explaining the options, providing some structure to these decisions and explaining in plain English the advantages, disadvantages and implications of these decisions a professional can make the choices you need to make as you approach what should be a fantastic leg of your journey as brilliant as possible!

As I’ve said already the pension freedoms are overwhelmingly positive. However like many of the decisions of our lives we need to be careful to avoid the potential pitfalls (three of which I’ve mentioned above) and make choices designed to live the life you want.

Regardless of whether you decide to navigate your journey to retirement yourself or you decide to work with a professional I wish you all the best in your journey into retirement and beyond!

To explore how we can help please email CassieDaems@Cervellofp.co.uk or call us on 08450 568 959.