Your pension may be one of your most valuable assets and is there to provide you with an income when you stop working, so you’ll want to ensure your retirement savings are working as hard as they possibly can for you. 

A professional financial advisor can provide the help you need when it comes to big decisions, such as how much to withdraw from your pension while ensuring you don’t run out of money in retirement, or which investment options might be the most suitable for you. Read our article Preparing for retirement: your seven-step pension checklist to find out about what you might want to consider as you approach retirement.

Here we look at some of the situations when you may want to seek pension advice, and why seeking professional help could boost your retirement savings.

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Pension advice can help you get the most out of your retirement income, helping you on your way to a secure financial future. If you have more than £75k in pension savings, take the first step by arranging a free, no-obligation initial consultation with an expert from Aviva Financial Advice. Any recommendations advisers make will be for products from Aviva and other carefully selected partners. There’s no obligation, but if they feel you’d benefit from paid financial advice, they’ll go over how that works and the charges involved. Capital at risk.

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1. You are considering transferring your final salary pension

It’s a legal requirement to seek professional financial advice if you want to transfer your final salary, or defined benefit pension, to another provider and it’s worth more than £30,000. Rules set out by the city regulator the Financial Conduct Authority (FCA) state that it’s essential to seek advice if you’re moving your final salary pension to a defined contribution, or money purchase pension, even if you later choose not to follow the advice given. That’s because this type of pension is generally considered to be the gold standard, as it provides a guaranteed income in retirement. Read more in our articles What is a defined benefit pension? 

Moving a final salary scheme to a different pension isn’t usually considered a wise decision, as you could lose valuable benefits. You are able to cash in a final salary pension that’s worth less than £30,000 under so-called ‘trivial commutation’ rules, and in this case you don’t have to seek advice, but you may still be wise to do so. Read more in our article Should I transfer my final salary pension?

If you’re considering getting professional financial advice, Aviva is offering Rest Less members a free initial consultation with an expert to chat about your financial situation and goals. There’s no obligation, but if they feel you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.

2. You need help choosing pension investments

Deciding where to invest your pension savings in the hope they’ll ultimately grow in value to provide enough money to fund your retirement can be daunting. You might choose your own pension investments if, for example, you’re self-employed and don’t have access to a workplace pension scheme, or you want to pay into a private pension in addition to your employer’s scheme. A financial advisor can help you to take the first steps in choosing your pension investments if you don’t know where to start. Read more in our guides Pensions for the self-employed and How private pensions work

You can contribute to several different types of personal pensions. There are simple options that offer a range of ready-made pension plans to suit different attitudes to risk. A self-invested personal pension (SIPP) usually gives you the greatest investment choice. You can choose the investments you want to hold yourself from thousands of funds, shares and investment options, including other assets such as bonds, property and cash. You can pay for a financial advisor to manage your SIPP on your behalf, or to choose your initial investments, for example.

3. You want to withdraw money from your pension that’s fallen in value

Whether you’re still paying into a pension or already drawing an income from your pot, it can be difficult to know how best to manage your retirement savings during turbulent economic times. If you want to withdraw money from your pension and it’s fallen in value, it’s important to plan your withdrawals carefully. You may be better off, for example, using cash savings you might have before dipping into your pension, or delaying your retirement to enable your retirement pot to hopefully recover its lost value. In this scenario, taking professional financial advice could give you valuable peace of mind as to the best option for you based on your individual circumstances.

Difficult periods also make it important to check where your contributions are going, and that your investments haven’t become too skewed towards a certain market or particular type of holding. Again, unless you’re an experienced investor, it can be tricky knowing if you’re investing in the right investments based on your life stage and attitude to risk. Remember, though, that there are no guarantees when it comes to investing, and your investments can fall as well rise in value. 

Read more in our articles 9 tips for maximising your pension in difficult times and How can I phase my retirement?

4. You want to manage your tax liabilities

The amount of tax you’ll pay on your pension withdrawals depends on how much you take out, and your income tax bracket. You can usually withdraw up to 25% as a tax-free lump sum from a defined contribution pension once you reach the age of 55 (rising to 57 from 2028), but the rest will be treated as income for tax purposes. Knowing how much to take from your pension each year while keeping tax bills to a minimum can be tricky, but a financial advisor can help you to manage this. For example, they might suggest you spread your tax-free lump sum withdrawals over several years, which in addition to your annual tax-free personal allowance could keep your tax bills down. Find out more in our article How much tax will I pay when I withdraw my pension?

5. You are deciding how best to take an income from your pension

Since the introduction of pension freedoms in April 2015, you can do as you wish with your retirement savings when you retire. Before the introduction of these rules, the majority of retirement savers bought an annuity with the money in their pension pot at retirement, after perhaps taking their 25% tax-free cash lump sum. 

However, you now have important decisions to make on the right option for you as you approach retirement when it comes to how you’ll turn your pension savings into a retirement income. 

There are more options than ever at retirement, including buying an annuity to produce an income for life, flexi-drawdown, and taking cash lump sums from your pension. You may choose to buy an annuity with part of your pot, for example, while keeping the remainder invested in a flexible drawdown plan. Find out more about these in our article What is pension drawdown and how does it work?

Choosing the best option for your retirement savings could be one of the most important financial decisions you ever make, so it could be worth speaking to a financial advisor to guide you through this process. Read more in our article Your pension options at retirement. 

The Government’s Pension Wise service, run by the Pensions Advisory Service and Citizens Advice, provides people aged 50 and above with free guidance on their pension choices at retirement. It’s always worth taking advantage of a free appointment with Pension Wise, however if you want advice that’s tailored to you specifically, you’ll also need to speak to a financial advisor.

If you’re considering getting professional financial advice, Aviva is offering Rest Less members a free initial consultation with an expert to chat about your financial situation and goals. There’s no obligation, but if they feel you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.

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