People need to act now to take advantage of the biggest pensions shake-up in more than a century, according to West Norfolk’s largest financial advisers.
New pension rules that come into force on Monday, April 6, will give anyone over the age of 55 control over how and when they spend their defined contribution pension plan pot, removing the requirement to buy an annuity that pays a monthly amount for life.
And Simon Ring, of Lynn-based Ring Associates, said there was still time to take advantage of existing tax breaks before what’s been dubbed “pension freedom day”.
“We would urge anyone with a pension and who is at or near the age of 55 to consider making the maximum pension contribution that the current rules allow before April 6,” he said.
“The minimum of 20 per cent tax relief on contributions combined with the new freedom to access money from your pension fund whenever you want makes it almost a no-brainer to invest spare cash in your pension for the first time.
“Previously people were reluctant to invest larger amounts in pensions because the cash was locked in until retirement, and even then you were pushed down the annuity route and/or had a capped income under drawdown rules.
“But the new freedoms give people control over their own money, will radically change the way we think about pensions and open up a vast array of options for people to plan for their retirement.”
The increasing need for financial advice has seen Ring Associates nearly double its workforce from 11 to 21 in the past three years, and more growth is expected this year.
“The government is insisting that anyone who transfers more than £30,000 from one pension to another seeks financial advice, and there is also a real need for people to seek specialist help sooner rather than later to make the best of the new rules.
“With the greater freedoms and unrestricted access to your money comes great responsibility to plan properly for your retirement well in advance. About a third of the population would benefit from financial advice, but only about two per cent currently take it, so there is a lot of scope for people to plan for their futures better with these revolutionary new rules.”
Ring Associates manages more than £130million of assets on behalf of clients, providing independent advice on wealth management, retirement planning, pensions and trust planning.