Fully cashing in your pension pot? Wait!
New pension rules introduced in April 2015 offer you more flexibility with your pension pot than ever before. Among your options, you can now choose to take small cash sums from your pot when you want them, or take all your pot as cash in one go.
Figures from the Financial Conduct Authority (FCA) reveal 68% of pensions taken out between July-September 2015 were cashed in full. This is the equivalent of just over 120,000 pension schemes. A further 58,000 were used to take an income after taking the tax free cash sum.
Although it's not possible to know what percentage of these cashed in pension schemes represented the only private pension held by these individuals, it's still a potentially worrying stat. If it is their only pot, what will there be left when they do come to retire?
We asked our pensions expert, Teresa Fritz, for the things to think about with your pension pot.
Your pension pot – what to consider
Before you decide what to do with your pension pot, take some time to do some research and get the help you need.
If you are eligible for an appointment with a Pension Wise adviser then take it. Pension Wise is a government service set up to help you with your choices at retirement.
An appointment won't cost you anything (unless you count the cost of a phone call or the bus/petrol to the nearest office) and you will have someone to help you go through the pros and cons of each option.
If you prefer to do some research yourself before (or after) your Pension Wise session then we can help.
Our Retirement Income Options tool helps you understand the best course of action for you
With the Retirement Income Options tool you can go step by step through all your options - or just dip in and out – it's your choice. But you can do it in your own time and it will help you to understand what taking a specific course of action might mean to you in the long term.
Most of the options available under the new pension freedoms aren't straightforward and many people find they need further help in the form of a professional financial adviser.
If you do need professional help use the Money Advice Service Retirement Adviser Directory to find a regulated adviser who can provide you with financial advice in the way you want it - in person, by telephone or online.
Regulated advice has to be paid for, but there are various ways you can pay and you don't have to commit to anything before you know roughly how much this will cost. Paying for professional advice can often save you a whole lot of money later on.
Want to know more about your retirement options? Our guides can help
This article is provided by the Money Advice Service.
