ADVICE: With freedom comes responsibility, says TH March

Chartered Financial Planner Steve Clemence of TH March gives advice on the new Pensions Freedom Legislation.

Buying a Lamborghini with your pension pot may not be a responsible way of spending the money you and your employer have saved into your pension.  With the average pension pot being £38,600, you might instead have to buy a smaller more economical car with low running costs.  The point that Pensions Minister Steve Webb was trying to make is that your pension is your money and it is up to you how you spend it.

The State Pension is changing, you can check out what you might get here:                 www.gov.uk/calculate-state-pension  (I personally will have to wait until I’m 67 to get it!)

From now on,  just consider your pension as another investment (the rules are different from other investments, but so are the rules for ISAs).  If you need capital or income consider which investment you should take it from, the best place to take it from may not be your pension.

BE PENSIONS WISE

The Government has set up a new organisation to help you make decisions at retirement (if you have a pension pot rather than a final salary pension scheme). www.pensionwise.gov.uk

DON’T FALL FOR A SCAM – Reject Cold Calls

It is not only property developers waiting for lots of money to be released from pensions (and I hope when people consider their situation sensibly there won’t be a mad rush to take money out), there are others wanting to jump on the bandwagon who are happy to just take your money.  This is a very real threat; in fact one of our staff at TH March nearly fell for it. The people who ring you are very convincing often pretending to be from a legitimate organisation. Some useful advice can be found at: www.fca.org.uk/consumers/scams/how-to-avoid-scams

THINK ABOUT TAX

If you are over 55 and you are tempted to take out the whole lot out you may not get it as HMRC will take a slice. Furthermore, the 75% of your fund that is taxable income may mean you have to pay a lot of tax initially (because of the way PAYE works) and then wait to get some back. www.pensionwise.gov.uk/tax

TOO MUCH CHOICE AND INFORMATION!

Need help making decisions on auto-enrolment, how much to pay into your pension or how to take the money out of your pension? Give Steve a call on 01822 855555 or email him at: financialplanning@thmarch.co.uk

For more information and guidance from the experts at TH March, visit www.thmarchfinancialplanning.co.uk