The importance of retirement advice

When Pension Freedoms were launched back in 2015 it opened a whole range of options to people approaching retirement. If you’re over 55 you can now access your pension pot more flexibly than ever before. This is great in principle, and for those who know what they’re doing it is, however when it comes to retirement income, mistakes can be very costly.

Just Group’s retirement risk index
Retirement income provider Just Group recognises this issue and undertook some research to uncover the scale of it. They found only half of those aged 40 or above have a ‘basic understanding’ of the key factors that will influence the decisions they make in retirement. The survey (of 2,102 UK adults aged 40 plus) also found that 7% were at high risk of making poor later-life decisions with the remaining 43% being weak in some key areas. The youngest respondents (40 to 44) and worryingly those aged just under 55 (the age at which most people can access their pension cash) were more likely to be at high risk of blowing their pension pots![1]

Importance of advice

While people may have adequate knowledge there is a big difference between avoiding bad choices and actively making good ones – advice can help bridge this gap. At retirement advice creates better outcomes, provides peace of mind and reduces the risk of making poor financial decisions by looking at the following:

  • Accessing tax free cash

  • Providing tax free income in retirement

  • Clearing debt with tax free cash

  • Flexibility of income in partial retirement

  • Providing guaranteed income for life

  • Ability to pass on your pension fund to loved ones

  • Being tax efficient and avoiding unnecessary charges

  • The effect of Stock Market volatility on your portfolio

Women less likely to shop around for retirement
Recent research from our colleagues at LEBC found that only one in four of those clients who shopped around for a better deal were women, compared to over a third in earlier years.[2] This is particularly worrying as a healthy, non smoking, 65 year old can improve the annual income offered by up to 5.7% per annum, simply by exploring the open market option. Kirsty Turner, Director of Sales & Operations said: “We would like more women to be aware of the additional lifetime income they could secure simply by exercising their right to move their pension pot to another company; their failure to do so will only exacerbate the pensions gender gap.”

And finally…

Our impartial advisers can talk to you about your needs and personal circumstances to make sure you’re maximising your retirement income and that you don’t get any surprises from the taxman. If you’d like to speak to one of the team about your retirement please get in touch. We’ve also got a handy factsheet on your Retirement Options which looks at everything from Pension Freedoms and Tax Free Cash to options for income and small pots – click here to take a look.


[1] One in 14 likely to make poor pension choice,, viewed 20/11/18

[2] LEBC Annuity Market Update Nov 2018

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