Posted on: 5th June 2020
income is something that many will be concerned about as COVID-19 continues to make its way around the UK. Although it is impacting assets in numerous ways, the UK’s main regulators have teamed up to offer a comprehensive pension guidance service.
Recently, a “COVID-19 and your pension” document has been released, providing advice on every single pension concern.
This advice is jointly given by the Pension Protection Funs, the Financial Conduct Authority and the Financial Services Compensation Scheme, the Money &Service, the Pensions Ombudsman and the Pensions Regulator.
Within this guide, each regulator offers their own perspective on what should be done. However, each section appears to be based on an FAQ format. It also highlights how you can protect yourself against scammers, something that is currently a hot topic in thesector.
There is a lot to be covered in this guide, but savers and retirees can find helpful answers to the following types of questions:
· What happens to my pensions contributions if I’ve been furloughed?
· Is it safe to move my pension?
· How can the Pensions Ombudsman help me?
· How do I protect myself from pension’s scams?
· Is my pension protected by the PPF?
Many within the private sector have welcomed this guidance, such as Svenja Keller, the Head of Wealth Planning at Killik & Co, who highlighted the direness of the situation: “One of the realities of the Coronavirus crisis is that those who were looking to retire in the next few years have been significantly impacted, with recent figures indicating over a million workers are currently in this situation.
“This is because the values of their retirement pots will have fallen, but also because they may have less opportunity to save now due to job losses or reduced earning potentials. It’s an incredibly worrying time, knee-jerk reactions may take over and more are vulnerable to scams – such as the temptation to cash in a pension before its time or drawing out more than 25 percent tax free cash.
“This cross-regulator guide provides much needed clarity and guidance to steer people through the next few months, and its important people ensure they have all the information in front of them before making any major decisions that could impact their future financial security.”
Keller then offered his own guidance on what people should currently do with their pensions: “When looking at the wider options (i.e. not just pensions) in more detail, the main tool that can help someone who is close to retirement during COVID-19 and in general is cash flow planning.
“Normally, future expenditure such as long-term care costs and other planned foreseeable calls on capital are included and the model can run various scenarios to show what the options are. For example, different retirement ages, different expenditure levels in retirement, different levels of risk taken with investments, a possible future downsize and gifts to other family members.
“In the current climate, cash flow planning can be helpful to show whether someone can still afford to retire at the same time and / or with the same level of retirement expenditure, modelling the different scenarios in graphs. Some individuals may be comfortable working for an extra few years, whereas others feel better about reducing the planned expenditure but still finishing work at the same time.”
If you require an additional pension guidance service or financial advice, get in touch with today.