How An IFA Can Help You Navigate The Complex World Of Retirement Planning
Pensions have always been a complex area of wealth building, and over the last 10 years a major shift in both how people view retirement and retirement planning has resulted in many people feeling less confident in their decisions when planning for retirement.
Recent research from Canada Life has highlighted some of the benefits of taking professional financial advice when considering your retirement planning – particularly when it comes to deciding how and when to draw down funds from the pension pots that you’ve spent your working life accumulating.
Here’s our look at some of Canada Life’s key observations, along with our views on how an IFA can help you to make more confident, positive decisions when it comes to your retirement planning.
Planning for longer lives
More people are living for longer: According to Canada Life’s recent Life100+ research, in 2022, the number of people in England and Wales aged 90 and above exceeded half a million, and the next 25 years are likely to see a 200% increase in the number of centenarians in the UK.
However, what this Life100+ research also shows is that many people aren’t planning ahead for a longer life – and that includes their retirement finances.
Although more than two-thirds (69%) of people across the UK believe that retiring in our sixties will become a thing of the past, less than half (only 48%) agree that living longer means that we should work longer.
We need to rethink how we plan for our lives to come, and the importance of financial planning can’t be overemphasised.
10 years of pension freedoms
2025 sees the 10-year anniversary of a major change to pensions legislation. The ‘pensions freedom’ legislation that came into force in 2015 was designed to give pension investors greater control and allow them to make choices that better met their needs.
However, as the saying goes, with great freedom comes great responsibility.
Or perhaps we should say, with greater choice comes greater complexity.
Many people lack confidence in understanding their retirement options, and with lack of confidence comes lack of trust.
For example, before the 2015 legislation, 90% of pension savings were used to purchase annuities. But when George Osborne announced that “no-one would have to buy an annuity”, there was a significant increase in the numbers of people choosing to draw down some, or all, of their funds earlier than anticipated.
An obvious consequence is that it may reduce the long-term sustainability of your pension pot (you can only spend the money once) but a second consideration is how those income withdrawals are taxed. Those who withdrew a large lump sum were often surprised at the tax implications, particularly if they were still earning a salary.
Expert advice from an IFA helps to secure your long-term retirement income
FCA data shows that people who take professional financial advice are twice as likely to choose solutions that secure their long-term retirement income compared with those who don’t seek advice.
Your IFA can translate complex financial information into plain English and clear, actionable strategies, helping you to make informed, confident decisions that support your financial goals.
Before making any decision about accessing your pension funds, it’s important to understand the implications both on the sustainability of your retirement funds and on your tax liabilities. The best way to do that is to talk to an IFA.
Your Talis IFA will offer you clear, transparent advice about all aspects of financial planning, whatever your stage in life:
This article does not constitute tax or legal advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
