Take your time with pension freedoms - 6 April shouldn't be viewed as a deadline

It is important that customers understand their choices and what they will mean, says Andrew Hagger

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The Independent Online

The forthcoming pension "freedoms" have been dominating personal finance news over the last few months, and as we approach 6 April it is important that customers understand their choices and what they will mean.

The most important thing to stress is that just because these sweeping pension reforms start next month there's no need to rush.

Under the new rules, from age 55 you will be able to access all the money you have saved in your pension pot, and not have to buy an annuity. Options include: taking the whole or part of your pension pot as cash; keeping the money invested and draw a regular income from it; buying an annuity; or a combination of these.

Richard Jones, retirement director at Scottish Widows, agrees: "Consumers aren't being forced to make a decision on 6 April," he said.

"For many, the appropriate thing to do will be to keep money invested in their pension pot while they think about the best choice and plan how to provide for the future. For many people there is still a lack of understanding and certainty about what the changes actually mean. We must collectively try to avoid the risk of people sacrificing long-term and hard earned savings for a short-term need."

Although 6 April is seen as the start of a pension revolution, it shouldn't be viewed as a deadline by which you must make a decision.

It's important to check the details of your own pension plan(s) and get your head around your financial options in retirement.

There are a couple of websites which will help answer many of your questions and give you some useful pointers in this area. The Government's Pension Wise service, www.pensionwise.gov.uk, offers comprehensive guides and explains the various options, as well as showing you how to avoid pension scams. It also offers you the chance to register your interest for telephone and face-to-face guidance.

Another useful resource is www.scottishwidows.co.uk/retirementexplained, a refreshingly non-sales provider website that answers questions on the state pension, looks at how you're taxed in retirement as well as some useful retirement calculators which may help you come to a decision that works for you.

It's important to take time to consider your options carefully, particularly as rising life expectancy means we can expect a longer retirement.

Once you've had a look at the online help, it's worth speaking to an independent specialist to discuss the choices available.

If you look on www.unbiased.co.uk and enter your post-code details, you'll find contact details of independent financial advisers in your local area, some of whom don't charge for an initial meeting and discussion.

The Association of British Insurers this week issued a chilling warning regarding the increasing threat of pension scams when it admitted: "These reforms could make it open season for the criminals looking to cheat people out of their pension savings with too-good-to-be-true investment offers, or saying they can unlock the pension before age 55.

"If an offer seems too good to be true, it usually is. If in any doubt, contact your pension provider or Pension Wise."

All this additional freedom and flexibility may be good news for consumers – but only if they fully understand their choices and take sound financial advice from a professional adviser before signing on the dotted line.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk

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