01 Jul Brexit may affect your retirement income options, but don’t panic says financial adviser
Market volatility caused by the UK’s decision to vote to leave the European Union could negatively impact those looking to secure retirement income in the coming months, a pensions expert has warned.
Clive Barwell, Head of Later Life Advice at Wren Sterling, says predicting the future of pensions at this stage is impossible, but that people looking to secure an annuity shouldn’t rush the process despite what they might think about the future of the UK economy.
“I’m concerned that people may read the news and think things could get worse and conclude that means they need to secure an annuity immediately. My advice hasn’t been affected by the vote to leave the EU and is always ‘don’t accept your pension provider’s option without consulting a professional’ because the chances are it will not be the best deal for you.
“The Bank of England doesn’t know whether interest rates will go up or down so it’s pointless speculating on it, besides, financial planning should always be a long term process.
“An annuity remains the option for someone looking to secure an income for the rest of their life and this vote doesn’t change that, but pension providers will react differently, which will affect the value of an annuity they’re prepared to offer. An independent financial adviser will search the whole of the market to secure the best deal for you.”
Barwell says there are other less well known options for people to explore, such as a fixed term annuity, if they don’t want to commit wholeheartedly in light of market volatility.
“This sort of option could suit someone who has time on their side and no firm retirement plans, but many people will not have explored this option. There’s also a range of choices for people to consider after pensions freedom last year, but these should be considered with the help of an expert to avoid unnecessary tax bills and negatively affecting quality of living in later life.”
Your tax situation will depend on your personal circumstances. The decision to access your pension savings is an extremely important one. Before you do so, we strongly advises you to seek advice from a financial adviser to help you to understand your options. You can also obtain independent guidance from Pension Wise (pensionwise.gov.uk), a government service aimed at helping you understand your options.