A recent report by Unbiased, the Independent Financial Adviser search website, has revealed that 36% of those seeking independent financial advice do so in relation to retirement planning.
The large number of people seeking advice in this area is perhaps not surprising. Despite “Pension Simplification” retirement planning remains complex. Increased job mobility means that by the time they retire many people hold a range of pension plans, some occupational, some personal and unsurprisingly these plans are often not fully understood by those that hold them.
There may be a strong temptation to consolidate pensions in order to cut down on paperwork and ease the administrative burden but before undertaking any consolidation exercise, the benefits offered by your existing schemes should be thoroughly explored. While older contracts may have higher charges they may also offer useful features such as guaranteed minimum growth rates or guaranteed annuity rates (the rate at which the capital will be turned into income once you retire). If you have final salary pensions then a thorough analysis should be carried out to determine the viability of a transfer.
When you come to take benefits from pension schemes the options are again many and varied but unfortunately most people end up buying an annuity from their existing pension provider. If annuity purchase is deemed to be the most suitable means of drawing income, it pays to shop around to get the best possible annuity rate.
Whilst it is crucial to take advice on making the most of your retirement funds it is equally important to ascertain the competence of your adviser. Unfortunately the Financial Services Authority continues to uncover examples of poor advice in relation to retirement planning. With increased longevity the effects of the decisions you make regarding your retirement could be long lasting and it is therefore vita that you take good advice and make the right choices.