Pensions can be complicated things, so with pension advice you can make sure that you are making the right decisions about your pension.
You can get pension advice from an independent financial adviser. They can help you with all aspects of your pension, from reviewing the current position of your pot, to effectively managing your funds and knowing your options.
What is the difference between pension guidance and advice?
In 2014 the government announced that everyone approaching retirement could be entitled to free advice. This was later changed to free guidance. So, what is the difference between the two?
With pension guidance you will get an overview of the available options on the market, not necessarily the options that are available to, or even right for, you. Guidance provides generic information on all pension options, leaving you with questions best answered by an adviser. So, seeking guidance just because it is free could result in making the wrong decision and losing money in the process.
While pension advice is not covered in the Guidance Guarantee and therefore needs to be funded yourself, the information you receive is tailored to you. This means you can find out which options are most appropriate for you to meet your needs while looking after your financial future. Advice takes into consideration your current situation, the size of your investments, your goals and explains the potential risks and benefits of different options. You also have a lot more security when getting advice because if the advice is wrong and you lose money in the process you have access to the Financial Ombudsman Service or Financial Service Compensation Scheme.
What can a regulated financial adviser do for me?
A regulated financial adviser can:
- Check your pension and let you know your current pension value
- Search the market for a better pension deal with lower charges
- Improve the performance of your pension further by managing your investments to aim for a higher return rate
- Assess your current and future finances to let you know what options are best for you
- Help you release funds in the right way to avoid the common pitfalls and mistakes of doing it alone
When do you have to seek financial advice?
If you have a defined contribution pension then, while it is recommended to do so, it is completely up to you if and when you seek the help of a financial adviser.
However, if you have a defined benefit, or final salary, scheme then there are certain circumstances where you will need to seek financial advice. If your pension is worth £30,000 or more, you will need to speak with a financial adviser before releasing money or transferring to a different pension scheme. This is because these pensions come with a lot of benefits that are worth holding on to, such as a guaranteed income for life. And because they are such valuable pensions to have, it’s important to make sure you understand what you would be giving up before it’s too late.
Why you could be better off with financial advice
Statistics show that people who take pension advice gain, on average, £30,991 more pension wealth1. This is because a financial adviser can improve the performance of your pension by reducing the charges that you pay and managing your investments to get, on average, a higher rate of return.
With a regulated financial adviser by your side, you will also have the security and peace of mind of knowing that your finances are in safe hands. And with your future security being their top priority, you know that any advice you receive is in your best interest.
How much does pension advice cost?
Many things can affect the price of pension advice including the complexity of the pension you have, the size of your pension pot and how your financial adviser charges their fee. It’s a good idea to avoid financial advisers who charge a fee up front. This is because you will be charged even if you choose not to go ahead with their advice.
Here at Portafina we do things a little differently. Depending on the type of pension scheme you have, we can let you know if you are eligible for a no obligation pension check. This means that we can check your pension, assess your circumstances and provide you with your tailored recommendation without anything to pay. A fee would only be due if you decide to go ahead with our advice and ask us to take care of everything for you.
1What it’s worth, published by ILC UK (November 2019)