What to do – defined contribution pensions

Date Published: 23/06/2020 12:55

The current crisis has led us all to have concerns about our health and wealth. And for those nearing retirement with defined contribution pensions this may be a particularly worrying time. Jillian Thomas looks at what you need to think about if you have a DC pension.

The current crisis has been a worry for our clients on two main fronts: health and wealth.

When it comes to health, there is the obvious anxiety about the virus itself and then all the knock-on effects of the lockdown, whether that’s cancelled outpatients appointments or treatments, or the effects of isolation on our mental health. As a company we have done our little bit to help on that front, we have collected prescriptions and shopping for our most vulnerable client, and I have even become a bit of an expert dog walker!

On the wealth front, there are numerous concerns. And again, we have been here as much as we can. We have spoken to our clients to reassure and advise; we are on the end of the telephone or via camera and microphone through our computers to talk things through.

The stockmarket turbulence has made it difficult for us all, and none less so than those with personal pensions or defined contribution (DC) pensions who are nearing retirement. The financial volatility really means you have to do some thinking and planning about when to take a DC pension.

But the main thing is not to panic. We are here to help. Here are three simple things to consider:

  • Don’t act in a rush. If you sell down now, you are doing so towards the bottom of the market and this is could have an impact on your financial security for years to come. Nobody knows how long it will take for the investment markets to recover, but history shows they do eventually. Also crystallising pensions assets could create tax would could be mitigated by phasing the advice in over time. In most cases only the first 25 per cent is tax free, the rest is treated as taxed income.
  • Do remember that a pension isn’t necessarily the only form of retirement income. Do you have other assets like ISAs, cash savings or rental income? Could you use these to fund the first part of your retirement, while your pension fund recovers?
  • Beware of scams. Unfortunately there has been a lot of reported financial fraud since the start of the lockdown, with reports of people being sold non-existent pension plans. Unscrupulous people realise we are more susceptible to being exploited when we feel vulnerable. Remember any genuine company will be registered with the Financial Conduct Authority and better still remember the old saying, if it seems too good to be true, it probably is.

And do remember we are here for you to talk it over; whether it’s pension or investments or just a good old natter, please do get in touch. We are on the end of the line on 01246 435996.

Contact Us

Future Life Wealth
Management Limited,
Future House,
54 Ravenshorn Way,
Renishaw, Sheffield S21 3WY

+44 (0) 1246 435 996

Opening Hours
Monday - Friday 8.30am - 5.00pm

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