You are probably well aware that on April 6th the changes to pension legislation mean that you could access the whole of your pension fund for your retirement if you wish? This assumes that you are in the right type of pension fund and have control over it; a Personal Pension or similar.

Whilst the new flexibility for all equalises the legislation for the majority of people and is generally welcomed, this new found flexibility could cause problems:

• What happens if debt or serious family pressures force you to access the whole of your pension fund, leaving little or nothing for your retirement?

• You draw too much income over a few years and simply run out of income.

Your income available to draw from your pension could be affected by the sequence of investment returns – poor initial performance could dramatically constrain your pension fund and your income drawing options.

Any of the above issues could lead to a serious risk – that you outlive your income! Imagine the position you are in; you stopped work years ago, your capital assets are depleted and your income has dwindled because your pension fund has gone. You are now totally reliant on your State Pension.

You’re working hard to provide for your retirement; make sure you understand the long term implications of your actions. This is an important issue involving probably one of your largest assets.

Take independent financial advice.

 

Steve Speed 10/02/15