It is key, before you plan your retirement income, that you consult experts, to ensure you adopt the most appropriate money management tools. The UK government is introducing a new law allowing you to access these services, tax free. Here is you guide to the new pension advice allowance (PAA).
You should plan retirement income ahead of time. This will allow you both to live comfortably in your golden years and cover the cost of care without putting your property in jeopardy, so you can pass it onto your loved ones when you depart this world. Experts suggest that to live comfortably, you should aim to have around £15,000 – £20,000 per year, so it is vital to open a pension as soon as possible.
It is not always easy to determine how to access the money in your pension pot. The majority of people buy pension annuities, which is a contract where you agree to give the provider your pension in exchange for a monthly payment. There are so many types of annuity, which is right for you? Also, you can now withdraw some of your pension as a tax free lump sum, but is this advisable?
Benefits of advice
Many Britons turn to pension advice services, to determine the best option for their circumstances. This can prove advantageous, according to Unbiased, an independent financial advisor service. The firm’s figures suggest that someone with a pension pot equalling £100,000 will save £98 more per month on average, as well as increase their income by £3,654 on average per year, by seeking advice.
However despite these clear benefits, evidence suggests that many Britons are not reaping them. Figures released recently by the British Treasury show that only 22% of UK citizens who are approaching retirement are aware of the value of their pension pot. Meanwhile, just 14% of people in this country are confident that they can hit their retirement planning goals without advice.
Pensions advice allowance
The PAA is aimed to make it easier for you to access this crucial advice, according to International Adviser, an online financial resource. From April 2017, the PAA will give you the ability to devote £1,500 from your pension pot towards the cost of pension advice. You will be able to withdraw £500 per tax year, tax free for this, but you will only be able to pursue this course of action three times.
The PAA will be made available to all Britons, no matter their age. You can access pensions advice at different points in your life, from when you are selecting your first pension pot to when you are just reaching retirement, allowing you to adjust your saving strategy as circumstances change. We should note that from April 2017, pension suppliers will be able to provide the PAA to their members.
This allowance can be redeemed against the cost involved in seeking financial advice from a regulated provider. This includes both face-to-face guidance and robo-advice services. It will also be made available to you if you have a defined contribution pension or pensions with defined contribution elements. However, this does not apply to you if you have a defined benefit or final salary pension.
Prestige Tax and Trust Services
The PAA therefore, will allow you to access pensions advice more cost effectively than ever before, so you can plan your retirement income, helping you cover the cost of care in your later years. Cost of care can be a complex matter, especially if you wish to ensure your assets are not used to foot this bill. As experts on cost of care matters, Prestige Tax and Trust Services can help here, allowing you to both live comfortably in retirement and ensure your loved ones are provided for when you are gone.