Pension Transfer Advice - Why Do I Need It?

There are three main reasons why you might need pension transfer advice.

1. You are in a final salary or defined benefit pension scheme at work, and your employer wants you to move to a defined contribution scheme, or some other pension arrangement.  In some cases employers might offer incentives to you to switch.  If you have any choice in the matter, it is extremely important to take pension transfer advice to help work out what is best for you.

2. You decide you want to transfer accrued benefits within a company pension scheme to your own personal pension fund.  Whether or not to transfer is an extremely complex area and you really should seek specialist advice.

3. You are already in a personal pension plan, but feel the charges are too high.  Many of the plans sold before 2001 have high charges and management fees that can really eat into the final amount you accrue.  So if you have one of these it could well pay you to transfer – newer pension plans mostly have lower fees, as well as being more flexible as to the assets you can use as part of your pension fund.  However it’s a complex decision – you really must take pension transfer advice, both to check that it’s the right decision, and to help you select the right pension plan to move into.

Whichever of these situations applies to you, the pension transfer needs to be an informed decision.  You should look for an IFA (independant financial advisor) with a specialised qualification in pensions (you can check this out before you proceed).  Most providers of pension transfer advice will charge a fee rather than operating on commission. 

So what questions do you need to ask the adviser?  Whatever questions you ask, they should include the following:

• What are the risks of switching?  Do the risks outweigh the benefits or vice versa?
• Does the scheme you are transferring out of have transfer penalty charges?  If so, is there any way of reducing them or avoiding them?
• Request a “transfer value analysis” which will help you compare your current scheme with any alternative you are considering.

The final decision is always yours, but pension transfer advice will help you be clear about the best course of action.  Remember that in some cases the advice will be not to transfer.  It’s a big decision but advice will help you avoid a step which you later regret.

Pension Advice - Most Of Us Are Going To Need It

Everything to do with pensions is complicated – and it all seems to be getting more so, despite pensions supposedly having been simplified in 2006.  Whatever kind of pension decision you need to make, it will really pay you to take pension advice.

So what kind of decisions might you need pension advice about?  Some examples might include:

• How do I plan my pension?  Pension planning is basically about taking control of your life, rather than waiting till retirement and hoping for the best.  So the earlier you start taking advice on pension planning, the better.  The adviser will look at your employment situation, your current income and commitments, your preferred retirement age, etc.  The advice will look at such questions as: what is the right type of pension for me (e.g. final salary, money purchase, personal pension)?  What size of pension pot should I be aiming for? How much should I be putting aside each month? 

• Should I take “tax-free cash”?  This is now referred to as “pension commencement lump sum” (PCLS).  If so, how should I use it?   If you are in a company final salary scheme, you will usually receive the lump sum as part of the package.  However, if you are in a personal pension plan, you can opt to take 25% of the fund as a tax-free sum at the commencement of your retirement.  Of course this would affect your income so you need to consider whether this is something you really want.  If you haven’t yet paid off your mortgage, you could use the lump sum to pay it off, which would actually increase your pension income.  Another option is to buy a “purchased life annuity”, which has tax advantages over the standard pension annuity.  Or, of course, you could take that world cruise you’ve always wanted!  Pension advice can help you make the right decision.

• What is my tax situation?  How can I minimise the amount of tax I pay?  The tax situation where pensions are concerned is quite complex, so you could end up paying more tax than you need.  This is where you really do need pension advice.  The more efficiently you can organise your tax affairs, the better you can maximise your income in retirement, as well as maximising the amount you can leave to your family.  The pension adviser needs to ensure you know what tax relief you are entitled to on your pension contributions.  In addition, if you are in a position to make additional investments to increase your retirement income, you need to know what are the most tax efficient investments to make, to ensure your investment income in retirement has the minimal effect on your pension income.

Whatever your pension situation, you could probably benefit from pension advice at some point. 

Remember that, for the best advice, you should choose an Independent Financial Adviser (IFA) who has access to the whole of the market and who has an advanced qualification in pensions,  If you are worried about being pushed into a personal pension plan when it’s not the best option for you, choose a fees-based rather than a commission-based adviser.  But the vast majority of IFAs will give you advice that’s in your best interests and that will ensure that you are as comfortable as possible in your retirement.

Keyman insurance business rises at Legal & General

Insurer Legal & General recently reported that sales of business protection, including keyman insurance, rose by 230% during July 2008 compared with 2007.

The increases in business includes cover for keyperson protection, keyman insurance, director or partner share protection and business loan protection. L&G have repriced their keyman insurance rates and provided assistance to IFA’s in marketing keyman protection to Directors and business owners.

Keyman Insurance is designed to provide funds to a company when a key member of staff dies or suffers a serious illness which prevents them from working. Typically keyperson cover would be for the directors but equally the top salesman or sales manager could be classed as a keyperson if the business were to suffer financially in their absence.

An Independent Financial Adviser (IFA) would be able to provide advice and guidance on keyman insurance and the ways to mitigate the loss of a key member of staff.

36 million people in the UK have no life insurance

The Post Office published some statistics this week relating to how members of the UK population measure their wealth. According to the research the average UK adult believes they are worth £350,000. Naturally, there were regional differences with Londoners valuing themselves at £500,000.

The research goes on to mention that 75%, or 36 million adults, have no life insurance cover at all. 28% of those surveyed said that the cannot afford life insurance while over 8 million people feel that their lives are not worth insuring at all.

Sadly, as financial advisers, we do have clients who pass away and their families rely on us to provide financial advice and support for the deceased’s financial affairs. Many clients have died far too young leaving partners with children to bring up. Those who have adequate life insurance in place have a much less stressful time whilst dealing with the death as they have no need to worry about paying the mortgage or other bills.

Taking out life cover does not need to be complicated or expensive. Taking advice from an independent financial adviser will give 2 advantages:

1. You can be sure that the IFA will provide comprehensive advice taking into account all of your financial and family circumstances
2. The IFA will source the new life insurance policy from a wide selection of companies

It is not generally recommended that a single person with no dependants should have life cover. However, should you have a spouse, partner or children then life cover is something that needs serious consideration.

As a priority, any debts such as loans, credit cards or a mortgage should be covered with life insurance. Then a second calculation should be made to ascertain how much additional cover to have to provide long term financial protection for the family.

An IFA will discuss all of these aspects with you to ensure that the cover is just right for you and your family.

If you would like to discuss life insurance in more detail please visit our main website http://www.enhancedwealth.co.uk/insurance/protection.htm or call 0800 316 5756.

50% of population not seeking financial advice

A recent survey by Zurich found that 57% of the UK population aged 18 and over has never seen a financial adviser for financial advice.

84% of 18 to 24 year olds have never sought advice with 64% of those aged 25 to 34 have also not sought financial advice. Half of all those who have never seen a financial adviser think that they do not have enough disposable income to justify seeing a financial adviser.

20% of those surveyed say it is too expensive to have an adviser with others contacting their bank or asking family and friends for financial advice.

These figures are very worrying as good sound financial advice can have long lasting benefits. Your local bank or family and friends are not going to provide the depth of knowledge and technical detail needed to help establish a good financial plan.

Independant financial advisors (IFA) have many years of practical experience in dealing with all types of clients and solving their financial problems. This can be as simple as how best to save £100 per month to mortgages and complicated tax issues. Too many times we have met with clients who have received advice from their bank. The products they have are not the best in their class, are often poor performers and the clients invariably do not understand how their products work and integrate together.

Seeking good independent financial advice can pay dividends over the longer term and professional financial advice will provide a second opinion and alternative thinking to enable you to plan your finances correctly.

Independent Financial Adviser In Kent – How Do You Find The Best?

Independent financial advisers are human beings.  They come in all shapes and sizes just as humans in general do. If you have realised you need the services of an independent financial adviser in Kent, you may wonder how you decide which one is the right one for you.

Well there are actually a number of qualities that go towards making a really good independent financial adviser.

• First of all, an independent financial adviser in Kent needs to be a person of integrity whom you can trust.  Obviously, with any investment you are inevitably taking a certain level of risk.  So you do need to have complete confidence that your adviser is acting in your interests, not in his/her own, so that you can be as certain as possible that the products you invest in are the best ones for you.

• One intangible quality, which some have and some haven’t but an IFA must have, is financial “nous” – an instinctive understanding of how finance and the markets work.  Without this, even a highly qualified adviser won’t be a really effective one.

• An independent financial adviser in Kent needs to have good interpersonal skills.  Providing financial advice shouldn’t be just a one-off affair – ideally it involves building up a relationship over time.  If the adviser isn’t someone you feel you can get on with, the relationship won’t be a successful one and you won’t really benefit from the advice.

• The adviser also needs to be a good listener.  Providing financial advice is largely about understanding your personal situation – your hopes and aspirations, your attitude to risk, the kinds of product that appeal to you, etc., as well as your employment and family circumstances.  An adviser who does all the talking, or who doesn’t appear to concentrate on what you are saying, is unlikely to provide the best advice.

• The other side of this coin is that the adviser also needs to be a good communicator.  Obviously, if someone is giving you advice, you need to be able to understand it!  Financial matters can be very technical and can seem like gobbledegook if you’re not familiar with them – but the adviser may not realise that you haven’t a clue what he/she is talking about.  It’s difficult to explain technical stuff in clear, non-technical language but the adviser needs to be able to do this so that you can make the right decision as to which product to choose. 

It may seem from all this that a good independent financial adviser in Kent has to be a combination of the Archangel Gabriel and Bill Gates.  Of course, no human being is perfect and no IFA is perfect either.  But the more of these personal qualities the adviser has – along with good qualifications and experience – the better advice you are likely to get.  So use your introductory consultation – which most IFAs don’t charge for – to assess how far the adviser is someone you can work with.  If not, don’t be afraid to go somewhere else. Getting the best advice is important for your whole future.

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