Millions of people will now be given FREE pension advice – are you eligible? | The Sun
IF you're 55-years-old or over and about to access your pension, you might want to get some guidance from a professional first.
That is why the Government service, Pension Wise, will be offering a free guidance session for those who wish to move money from their pension pot.
How can I get free advice?
You can get free advice thanks to the scheme that Pension Wise introduced in June 2022, Stronger Nudge.
Becky O'Connor from interactive investor is happy to have the scheme on board at the company she's working for as she hopes that more people can benefit from it.
She said: "The Pension Wise service can help people to at least understand their options and feel more confident about what to do next. It is a useful guidance service for the hundreds of people who approach the age they can access their private or workplace pension savings every year, but who are not sure what to do with it at that point.
"The service doesn't offer tailored advice following a review of all of someone's finances in the way an advisor would, but it fills an important gap and has been underused to date."
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This service is open for those who either have a defined contribution pension – the kind of pension you contribute towards. Or to those who have a personal or stakeholder pension, including self-invested personal pensions.
You also must be aged 55 or over and have a UK-based workplace or private pension pot to be eligible for the Stronger Nudge scheme.
Your pension providers must let you know that you are being offered such service, even if you choose to decline it.
But you should always take financial guidance or advice before you proceed with moving any money from your pension pot.
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The service will not be available to those who are accessing a defined benefit pension which is based on your final salary and years of service rather than your own contributions.
To book an appointment with Pension Wise, simply visit your pension provider – who must make you aware of the service – and they'll book it for you.
You can also call up Pension Wise on 0800 138 3944 from Monday to Friday between 8am and 8pm or use the online booking form.
You can rebook another free guidance session if your pension circumstances changed or if you want to discuss a family member's or friend's matter.
To discuss someone else's pension, you need to have written consent or show proof of a power of attorney.
What do I need to bring?
Before you head over to your appointment, make sure that you have all the information needed on each pension scheme that you have.
If you lost track of your pension schemes throughout the years, you can use the Pension Tracking Service which will help you locate and lost pensions.
You should also have an estimate of how much state pension you might get.
The state pension increases each year to keep up with the rise in living costs – this is known as the triple lock.
The state pension for the 2022-23 tax year is £185.15 a week. Beware that this is the maximum amount that you will get and it all depends on how many years you made National Insurance (NI) contributions.
We previously explained everything you need to know about the state pensions, how much you earn, at what age and how you claim it.
You also need to be aware that when transferring money out of your pension for the first time, you will be taxed.
Why is it important to get guidance on your pension?
There are many pension scams out there, and this guidance will help you to keep your eyes open when transferring money out.
Another reason is that sometimes, taking money out of your pension is not always the best option, and these people can help provide other ways how to make use of your pension.
Becky O'Connor from interactive investor explained how it can be very complicated to decide what to do with your pension and what regulations and restrictions it has imposed on it. Pension schemes come with different limits and rules and it can be very confusing to try and figure them out on you own.
She said: "Many people currently approaching retirement have several past schemes, some of which may be defined benefit and some defined contribution, with different rules and restrictions attached, so knowing what to do can be very complicated and hard to navigate on your own.
"At the same time, many retirees cannot afford or may not want to seek independent financial advice. There remains a risk that in not knowing what to do, people make decision that put their retirements at risk, such as transferring their pension pot to cash rather than leaving it invested for growth.
"So this service is really crucial, can help people save and make more money to put towards their retirement and take-up does need to improve.
Meanwhile Emma Byron from Legal & General spoke about how the firm took part in the trial runs of how to approach such customers and offer them the guidance.
This helped them to compare how people who took the service and who not, faired in their pension decisions and that is why she in favour and encourages people to make use of such scheme.
Emma said: We fully support the stronger nudge guidance. Having participated in the behavioural trials to explore the best way to persuade people to take guidance from Pension Wise, we found that stronger nudges led to a greater take up of appointments.
"We also saw that where people took no formal advice or guidance, they were almost three times as likely to make a cash withdrawal than put their money in an annuity or drawdown product that could benefit their finances longer term.
"Taking cash isn't always the wrong decision, especially for people with smaller pension pots, but what we did see was a stark difference in the actions of people that took advice or guidance and those that didn't.
"Taking financial action without giving it proper thought can have a real impact on your lifestyle long-term and as we've seen from recent cost of living pressures, having an adequate safety net is essential."
What other help is available?
Throughout the time when you are working and probably the pension is the last thing on your mind, your employer got you covered.
It is compulsory for an employer to put any staff between the age of 22 and state pension age, 55, and are earning more than £10,000, to enrol them in a pension scheme.
This scheme helps people to save for when it's time to say goodbye to working life and start a new chapter in retirement.
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Both employer and worker pay contributions to the scheme, as we previously explained in another article.
You can opt out of the scheme if you want to and your employer will stop making contributions towards your pension.
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