How you turn your pension pot into income is one of the biggest financial decisions you’ll ever make. The new pension freedoms give retired people more choice than ever before, but there are also more pitfalls to avoid.
Getting it right usually requires you to do your homework, take financial advice – or both. Whether or not to seek the help of a financial adviser is a conundrum for many.
Some have no choice in the matter: if you want to move money out of pensions that offer valuable guarantees, such as occupational schemes, you have to get advice first.
The government has now introduced a scheme for defined contribution pension plan holders, it allows them to make three withdrawals tax free, in their lifetime from their pension pots, one withdrawal in any one year is allowed. The allowance is for the sum of £1,500, meaning £500 each time advice is needed. This they believe, will enable people to obtain valuable retirement advice at crucial times, perhaps life changing events such as, changing their job, marriage, divorce or early retirement.
One study suggests that the average time needed to collate information, analyse products and give recommendation to any client seeking retirement advice is on average 9 hours. The average hourly rate for financial advice of an investment nature is £150 per hour. So, although the government allowance is helpful, on average it will not cover the full cost of an initial retirement review.
This being said taking retirement without advice can be costly to the consumer, as tax efficiency may be missed.
At Philip J Milton & Company, we offer an initial consultation at our cost, after which we will charge an hourly rate for our initial report, once you become a discretionary client, you will receive ongoing annual reviews at no additional cost and develop a relationship to ensure you stay on track to meet your financial aims and objectives. Early intervention, can be a saving in the future, as relationships form and continued guidance means the need for costly advice at retirement, can be reduced over time. Please call us today, to arrange an initial consultation, at our cost, with no obligation.