Few areas of financial planning cause as much confusion as pensions. Now, there’s another change to contend with for those who turn 55 this year after the introduction of an alteration to the rules covering income in retirement.
The latest amendment came into effect on Monday, February 1 and is designed to help investors looking after their own pensions, the aim being to prevent costly mistakes. It targets the dangers of taking too much risk by investing in racy products, or too little by leaving the money in an account that is seen as safe but offers little by way of return on the investment.
Since the start of this month, pension companies have been obliged to offer savers four options for savings moved to a drawdown account where it is invested for the purpose of providing an income in retirement.
The savers can now leave the money to grow, use it to secure a fixed pay-out, take some of the income over the coming years, or withdraw all of it at any stage. The pension company now has a duty to offer an investment product that best suits the saver’s plans. The main aim is to prevent them from holding too much unproductive cash for long periods of time.
This latest change to pension rules underlines the need to seek advice before taking any action. If you need guidance on retirement planning in Chester or Shropshire, Hartey Wealth Management can help you make the most of your money.