Confused About the New UK Pension Rules?

If there is one Personal Finance issue that seems to be baffling millions of people in the UK at the moment, it is that of the new UK pension rules that are due to come into force in 2015. These rules are set to completely overhaul the way in which people fund their retirement. We will be writing a post very soon outlining details of the changes that will be coming into effect and hopefully this will simplify things a little. I thought that this might be a little heavy for a Monday afternoon though. :-) So instead, I decided we would today give mention to an upcoming event.

Update: You can now view the video of this event at the end of this post.

If you are genuinely worried about the new pension rules that are coming into force next year and you simply can’t wait to wrap your head around them, then be sure to have your twitter feed open to follow any information coming out of an event that is taking place at The Hospital Club in London on Wednesday 17th of December, just a couple of days away. At this event there will be a lot of useful information presented by prominent and respected speakers in the field of UK finance, discussing whether the aspirations of people who are approaching retirement are still considered to be realistic in today’s changing financial world? These speakers will also discuss how best to fund your retirement going forward in our new economic climate, a climate where the usual rules of retirement planning are changing before our very eyes.

A number of industry experts will be panelling the debate including:

  • Steve Webb – (Minister of Pensions)
  • Stephanie Condra – (AXA Investment Managers)
  • Neil Lovatt – (Scottish Friendly Assurance)
  • Steve Bee -‘Pensions Guru’

These days it seems that too many of us are either failing to place enough importance on retirement saving and planning, or we are instead worried that the opportunity to do so simply is not available to us anymore. We may feel this way because of a lack of future job opportunities or perhaps we feel that age is now against us and it is now too late for us to start making any real and meaningful impact on the balance of our retirement fund, at least not to achieve the kind of lifestyle that we would ideally like to have during our retirement years anyway.

If you are one of those people who have given up hope, please don’t. It is never too late to start planning for your retirement and it is also never too early to start saving for it either. If the whole idea of saving for retirement is a little bit baffling to you, then be sure to invest a little of your time into learning how best to make the most of your current financial situation so that you don’t waste the opportunity to grow your investments and savings, thereby securing your financial future.

Many of the mistakes we make in life can be rectified quite easily. Others require a little more hard work. With retirement planning however, we only really get one shot at it. By the time we reach retirement age, we are likely to feel the impact of our previous financial decisions more than ever before. It is therefore imperative that we make the most of all available opportunities to increase our knowledge of basic, as well as more complex retirement planning principles and put them to good use so that we can enjoy our retirement in financial security, rather than financial hardship.

If you would like to follow the debate then you can do so by following the MyFS team on Twitter.

Here is the video of this debate on the new pension reforms with a few notes and points of interest also outlined below:

If you don’t have time to watch the whole video then here are a few points of note which you can research in more depth when you have some free time:

  • Charge caps will be introduced by the government to prevent pension firms from charging fees which are over 0.75%
  • The reforms are being put in place to give individuals full control over the decision of how to use and invest their own pension pots.
  • The government aims to ensure that pensioners will have access to free advice should they need it, rather than just leaving people clueless as to the options available.
  • On the subject of whether people are likely to use this new pension freedom wisely, Australia was mentioned as an example of a country which has a similar system but where it has not necessarily been used in the best way. In Australia some people have been taking a very short term view, running up debts as they approach retirement knowing that they will have a lump sum to bail them out. Some have also chosen to buy a home, rather than making provision for the replacement of lost income during retirement. This is something to be wary of when deciding how best to use your new UK pension pot freedom.
  • Neil Lovatt of Scottish Friendly brought up an interesting point in asking the question of whether pensioners should be means tested before allowing them to withdraw their pension pot, to ensure that they will not need to claim benefits in future years after potentially blowing a pension which could otherwise have provided them with an income during retirement.
  • The reforms should hopefully result in a range of new pension products being created to more specifically meet the needs of pensioners. Inflation protection, capital protection, longevity protection and adequate income provision being just a few of the things mentioned.
  • An interesting point was made regarding people’s lifetime habits of making decisions based on income and not based upon being handed a lump sum of money. This might not be an easy transition for some as they try to figure out how to make their lump sum last for the next few decades of their lives.
  • From 2018 no-one will able to draw a pension at the age of 65 anymore, so this needs to be taken into consideration when making plans for later life.
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One Response to Confused About the New UK Pension Rules?

  1. Probably because I am from the US and not up to speed with everything in the UK, this all sounds really complicated to me. Hopefully for those actually living in the UK this isn’t as confusing!
    Jon @ Money Smart Guides recently posted..16 Habits of Wealthy PeopleMy Profile

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