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Pension Freedom, food for thought in financial planning

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Ever thought how much you would love that second hand Ferrari in retirement? How about a nice little fishing boat to use in the summer?

All this would be possible if only you could access all of the money in your pension fund. Well great news, you can…. BUT DON’T!

Many of you may have heard of George Osborne’s pension freedoms allowing millions of savers access to their entire pension funds. This is great if you have a large amount saved away in ISA’s and other investments.

However, for most people a pension represents their sole savings vehicle to provide for retirement and often the amounts saved are very modest.
The obvious use for such changes are to access most of your pension in early retirement when you can best enjoy it and leave the rest to provide a modest income.

This seems sensible as people with fixed annuities struggle at the start of retirement and then have a surplus of cash later in life when they least need it!

However there is no guarantee to stop frivolous spending, I have had numerous enquiries from people asking if they can fund a wedding or a new car. 

All seem important now but will seem less so when their only income in retirement is less than £113.10pw from the state pension.

In short, pension freedoms are a great new planning tool and can add considerably to the quality of your retirement if managed correctly. As for those that see this as an opportunity to squander their savings, well they will have to live with the unpleasant consequences later in life.

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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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