Would you Seek Advice Before Drawing Your Pension?


Research conducted by Saga has confirmed that one in seven UK retirees accessed their pension pots without advice, which represents more than £3.2 billion having been drawn as a lump sum from pensions. Retirees have accessed approximately £23.6 billion in total since the pension freedom rules were introduced in April 2015.

Saga’s research also revealed that 84% of UK adults do not fully understand the new rules and are therefore unlikely to be aware of the potential income tax liability which can arise when withdrawing lump sums from pensions. Attitudes towards advice showed that 1 in 10 would consider or have relied on advice from friends, family and colleagues to make financial decisions rather than seeking advice from a professional. A further 12% say they would not take any advice, professional or non-professional, despite considering taking a lump sum from their pension savings in the future.

Providing for your retirement and deciding when and how to draw your pension benefits is one of the most important decisions in your retirement. Making the right decision can avoid you incurring hefty tax bills and ensure that funds are drawn tax efficiently. Therefore, professional advice should be sought in this regard. Many feel that obtaining independent financial advice is costly and is only available for the wealthy. However, professional advice often ends up saving people more than it costs and will lead to a more secure financial future.

Therefore, before considering accessing your pension funds it is wise to obtain professional advice as there are various methods for drawing funds. It is generally not wise to withdraw the full value of your pension as this often pushes individuals into the higher rate tax bracket, resulting in 40% tax being payable on a portion of the funds received. Planning the withdrawals and taking into account your income needs, tax situation and risk profile is a far more sensible approach.

If you do require financial advice in relation to drawing your pension benefits, please contact the office and speak to one of our highly qualified Financial Advisers who will be happy to assist you further.