Pension Advice Essential Ahead Of Imminent Rule Changes
An imminent regulation is set to change the date at which pension benefits can be accessed – so Northamptonshire-based stockbroking and investment firm Cave & Sons is urging people to plan ahead.
This new rule, which will come into force in April 2010, is an example of the ever changing nature of pensions, so obtaining pension and retirement planning advice is more important than ever.
Cave & Sons, a local Investment Management firm of over 100 years standing, has also been providing pension advice to the local community for the last 20 years.
Here Peter Brydon, Associate at Cave & Sons, answers some important questions:
Is something happening in terms of a pension and a person’s age?
Yes, from April 6th, 2010 the age at which you can take benefits from most personal pension arrangements is increasing from 50 to 55. Should you wish to access your pension benefits in the near future you must do so by next April. If you are aged between 50 and 55 on April 6th, 2010 and do not take your benefits by this date you will lose access to these for up to five years.
Who is affected by these changes?
Anyone born between April 6th, 1955 and April 5th, 1960, will be affected by the changes because, should you want to begin receiving an income (including the tax free cash sum available from such plans) from one or more of your pensions in the near future, you will need to act prior to April 5th next year or face having to wait for up to a further five years.
Why is this happening?
We are living longer than ever before, giving rise to concern that people will not have enough income to see them through their retirement. By delaying the age at which benefits can be taken, the period of time that pension funds remain invested will increase, thereby logically increasing the likely value of the final pension ‘pot’. At the same time, it also follows that the benefits will be payable for a shorter period of time as the person will be at least 5 years older.
All this should mean that the income received by the individual is at a higher level than would otherwise have been the case and, as a result, reduce the potential for that person to be a ‘burden on the State’. Indeed, the Government has already taken action in this area by increasing the state pension age to 68 with effect from 2046.
What should we do now?
Whilst during these tough economic times you may feel that there are more pressing issues than when you can take your pension benefits, it is sensible to at least be aware of this change in the rules.
The stockmarket has risen by approximately 50% since its lows in March of this year and, depending on your circumstances, now may be an opportune time to consider your options for the increased value of your arrangement(s). Should you fall within the age range referred to above and wish to discuss how you could take any potential benefits, or if you would like some other advice concerning your pensions, then you should talk to a Pension expert.
We would recommend that you take advice on a fee basis rather than taking advice from someone who will only be paid by receiving a commission on any products that they advise you to take out. This way you can ensure your best interests are being looked after.