Pension buzzwords: What they really mean

Video: Confused about pension credit cards, pension liberation and pension passports?

Simon Read@simonnread
Tuesday 02 December 2014 12:51

What's going on with your retirement plans?

There have been a lot of changes going on in the pension world this year making it ever-harder to know what the rules are and what you should do about them.

In recent weeks, for instance, we've had firms offering pension credit cards, while there have been warnings about pension liberation. Meanwhile many of the bigger companies are working to launch pension passports.

Confused? So am I.

So I went to talk to an expert, Alan Higham, the retirement director at Fidelity Worldwide Investments.

I asked him what these new buzzwords mean and what, if anything, we need to do about them.

For starters, a pension credit card is being considered by one retirement firm to give those aged 55 or over easy access to their retirement pot once the new pension freedom rules come into effect next April. Is it a good idea? Mr Higham thinks the industry isn’t for it yet, and explains why in the video.

Pension liberation is certainly a bad idea. Pension liberation schemes entice savers by claiming to help them access their pension before age 55 or that people can already take more than 25 per cent of their pension as cash. But most offers are bogus and victims will lose most, if not all, of their savings. Mr Higham echoes other industry concerns about them

Finally, there are pension passports. These are a good idea and are designed to help people have all their retirement funds facts in one place, rather than having to trawl through reams of complicated documentation. Expect news from many of the big pension companies about them soon.

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