EQUITY RELEASE
AROUND 17-and-a-half million people have a defined contribution (DC) workplace pension. With this type of pension, savings are built
up through a combination of your own and your employer’s contributions, and the returns on investments made by the scheme that manages your savings. The funds other than for buying a first home or retirement.
This has been temporarily lowered due to the coronavirus pandemic, so savers should generally get back all the money they put in, subject to any investment losses incurred if the Lifetime Isa is invested in stocks and shares. The withdrawal charge will return to normal levels in from April 6 2021.
Government also contributes through tax relief.
You might be considering opting out, but think very carefully about how this will impact your income in retirement. Opting out means you will no longer receive the benefit of contributions from your employer.
You may be worried about how recent falls in the value of the stock
THOSE about to retire who face a pension shortfall may consider a lifetime mortgage to release equity from their home.
These should be investigated carefully as there will be consequences for inheritance planning. Seeking independent financial advice will help you decide if this is right for you.
market impact your pot. But bear in mind that financial markets have recovered from shocks in the past.
It’s worth noting that the contributions you and your employer make to your pension now may buy a greater number of shares at a cheaper price. And professional investors managing your workplace pension pot may have already acted
REMEMBER that if you give up pension saving, your family could miss out on valuable death benefits which are tied to your scheme.
With pensions, as with wills, it’s also worth checking your nominated beneficiaries have been updated to reflect your wishes and family circumstances.
On another note, for people in a defined contribution scheme who are close to retirement, it may be necessary to take stock of when you plan to retire and how much income you can expect to have. Consider getting free Government advice from the Pensions Advisory Service or Pension Wise.
Julian adds: “Seek guidance or financial advice if you are unsure what to do.”
■ Finally, be wary of criminals who may try to scam you out of your pension. Be particularly careful of cold calls asking for your pension information or offering you unusually high investment returns or urging you to act by a short deadline.
If you suspect something is a scam, report it to Action Fraud.