Pension Freedom or Pension Poverty?

Pension Freedom or Pension Poverty?

Pension Freedom or Pension Poverty ? – New research published points out the downsides of pension freedom and calls on the government to identify emerging risks both to consumers and taxpayers.

The report, Golden Years? What freedom and choice will mean for UK pensioners, provides a stark warning and remarks upon the Australian and American pension freedom experience – that the majority of pensioners who chose to take monies out of the pensions early and lived to regret doing so.

Indeed almost all the pensioners suffered hardship, either because they were far too cautious and withdrew very little out of their pension, or the opposite – people who extracted monies far too quickly!

The implications for UK pensioners is that they will mirror these behaviours and this is likely to have two consequences , one for the pensioners as they are likely to face severe hardship at some point in life, two for the taxpayer who will have to pay for an increase in the level of benefits.

We understand that the Australian government is likely to reverse its own pension’s freedom legislation.

I predict that the UK government will also make changes to the new pension’s freedom reforms, the most likely of these changes is too push back the age at which one can extract monies from pensions to age 65.

We provide a seven point stress test for people with pensions, if you don’t want to run out of money in retirement, contact us.

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A pension is a long-term investment that typically cannot be accessed until age 55 (57 from April 2028). The level of pension benefits offered could change depending on the value of your investments (and any income they may generate).

The interest rates in effect at the time you begin receiving benefits may also have an impact on your pension income. The tax consequences of pension withdrawals will depend on your unique situation. In later Finance Acts, tax rates, tax bases, and tax relief may change.

The opinions expressed by Ray Best are meant to inform and educate. Before making any investment decisions always take advice that is pertinent to your investment personality and financial situation.

You are aware that past performance will not necessarily be repeated in the future, but you should be aware that persistent poor performance invariably will.

The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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The guidance in this website is primarily aimed at a UK audience and is subject to regulation by the Financial Conduct Authority (FCA).

The Financial Conduct Authority does not regulate tax planning, estate planning, or wills and any form of legal documentation.