16 Apr 2015
The Association of International Life Offices (AILO) offers a free guide to help those of retirement age make decisions about how to use an established pension pot.
This is especially relevant at the moment, as the latest changes to the UK pensions landscape have been implemented by the coalition government and are designed to allow those who have built up a pension pot to do whatever they like with their money. The new rules, which took effect on 6 April 2015, mean that anyone over 55 with a defined contribution pension no longer has to purchase an annuity in order to obtain an income during retirement.
Whilst the freedom to choose how to use a pension pot might be welcomed in principle, people might also feel daunted at the prospect of having to decide how to manage their long term financial future. With so many options now available it could be easy to overlook the basics, such as how to maintain an income for life, how to manage changing health needs, how to spread the investment risk and how to protect the valuable pension pot from being unnecessarily taxed.
One of the options that some might consider, especially those holding a UK pension who are no longer UK resident for tax purposes, is investing in a cross-border life assurance policy. This efficient tax planning tool could tick a lot of the boxes for some people and AILO’s free guide, available for download at www.ailo.org explains this option in more detail. The guide also covers some of the main considerations people will have about how to tackle their long term financial planning.
Alan Morgan-Moodie, AILO’s Chief Executive, warns against making decisions about a pension without weighing up all the facts. “People need to take time to understand the implications of the new pension rules. This is a major change to people’s financial futures and a decision on how to make best long-term use of a pension pot is not something to be taken lightly. As well as the options that are being publicised widely, a cross-border investment, or a QROPS, might be appropriate for a proportion of the pension pot in some cases.”