We answer your pension advice questions

5 minutes

With 61% of over 55's unlikely to take financial advice at retirement, we're here to answer your burning pension FAQ's and help you get financially fit for the future.

We answer your pension advice questions

Are you at risk of losing out on thousands of pounds over the course of your retirement? New research shows that with a worrying number of consumers aged over 55 not planning on taking advice when they retire, this could be a reality for many retirees.

One year since the final Financial Advice Market Review (FAMR) report was published, we've found that many people approaching retirement are unaware of how taking financial advice could get you more for your money in retirement, and the vital new pension reforms which come into effect in April.

Two of the new pension reforms due to come into effect next month are a Pension Advice Allowance, and a tax break for employer arranged advice. However, despite these changes being only weeks away, two thirds (68%) of over 55s are completely unaware of the Pension Advice Allowance and eight in ten (80%) don’t know about the tax break for employer arranged advice.

Although those who take financial advice regularly get more from their money, our research also found that six in ten (61%) approaching retirement don’t plan on using a professional adviser because they don't understand the difference between advice and guidance, prefer to rely on their own research, or are concerned about the cost of advice.

We've pulled together these frequently asked questions to help you understand more about the world of advice, and how it could help improve your finances for retirement.



Where can I go for advice I can trust?

You can get financial advice from independent (IFA's) and other financial advisers, wealth managers or a pension specialist. Search the register to see which companies are approved.

We recommend people starting to think about their retirement also speak to Pension Wise in the first instance. This is a free government service offering impartial guidance on your pension options to help you understand all the possible choices. Pension Wise won't recommend any products or tell you what to do with your money but, it's a good place to start. Get in touch on 0800 138 3944 from 8am to 10pm everyday.



What are the benefits of advice?

Getting advice on your pension could see you significantly better off. By taking advice on your pension, you will be able to:

  • Get the best option or combination of options for your needs. Since the pension reforms, you now have more options than ever before on how to use your pension savings in retirement. Speaking to an adviser will help you understand the choices available and find the right one for you.
  • Maximise your pension savings. If some of your pension savings remain invested, a pension specialist will be able to manage the investment to maximise its growth at a risk level you are comfortable with.
  • Regularly review your retirement to keep you on track. Annual reviews will help you track investment performance and make changes to risk levels, allowing your funds the opportunity to grow.

On top of all this, a pension specialist will get to know you and find out what you want your retirement to look like, and shape your options to help you meet your goals and enjoy a safe, secure retirement.



What is the difference between advice and guidance?

Advice is given by a professional adviser such as IFAs, financial planners, wealth managers and pension specialists. Advice is regulated by the FCA, protecting you from negligent advice and will give you tailored recommendations for your individual circumstances and ensure that the best option or combination of options for your circumstances is found, even if this goes against what you originally thought to be the best decision for you. Taking advice usually costs money.

gives a general overview of the options available on the market for free by highly trained specialists. Guidance services won't tell you what to do with your money and you will need to research the market to find the right products and providers to suit your needs and preferences. There's no protection available, but taking guidance is a good place to start to help you understand the various choices available.



What protection does advice offer me?

By taking advice the full picture of your pensions and any special inclusions which enhance your retirement can remain protected. For example ‘safeguarded benefits’ like higher income for the rest of your life or a higher amount of tax-free cash may have an effect on the options available to you. A pension specialist is well placed to highlight these benefits to you in a clear and concise way.

In addition, by taking advice you are protected as a ‘retail client’. Retail clients are considered as the most vulnerable, so having financial advice means that you are protected by the FCA from receiving bad advice which may harm your finances. Find out more about how the FCA protects you, your rights and how to complain on the FCA website.



What is the Pension Advice Allowance and how can I use it?

The Pension Advice Allowance allows you to take up to £1,500 from your pension pot tax-free to pay for advice, in the form of three withdrawals of no more than £500 in different tax years. It can be used to pay for face-to-face advice.



What are the benefits of taking advice through my employer?

The tax break for employer arranged advice means that if your employer arranges advice up to the value of £500 for you it won’t be classed as a taxable benefit or be included on your P11D. This covers advice on pensions as well as general financial advice and tax issues relating to pensions.



How much does getting advice cost?

The cost of pension advice will vary from company to company. Always ask for an illustration of the costs upfront. Generally, advice providers will generate a cost for advice based on a percentage of your pension pot size. For example, a charge of 3% on a pension pot size of £200,000 may cost £6,000.

You can pay for advice in cash, or straight from your pension savings - making receiving advice achievable even if you don’t have the money in the bank. Don’t forget, the Pension Advice Allowance could release up to £1,500 tax-free from your pension pots to help towards the cost of advice.

I want to combine my pension pots - do I need advice?

Some advice providers will be able to advise you before you retire on whether combining or consolidating your pension pots would be in your best interest. They will review your current pension charges, past performance and risk profile to make an assessment.



Getting advice on your pension

If you're ready to get advice but not sure what you'll need, or if you're not sure if you have enough saved to make advice worthwhile, then we're here to help.


What information will you need from me to assess my pension options?

We recommend that you gather some basic information primarily so that we can understand what type of pension you have and if it can be moved without any detrimental effect to you.

It would be beneficial to have:

  • Your latest pension statements
  • Your current finances including debts or savings
  • A summary of your regular bills and spending. Try to note down your regular bills and payments you'll need to meet in retirement
  • Any details of pensions you've lost track of. Use the Pension Tracing Service to find details of your lost pensions

Where can I find my pension information?

You should receive a workplace pension statement and any final salary pension statements from your employer every year. Contact your pension administrator at work if you can’t find your latest statement. You may also have statements from previous workplace pensions at home.

For any personal pensions you have (those started outside of work) you should receive a statement from your pension company each year. Contact your pension company or companies if you can’t find your latest statement.

As you near the state pension age, you will receive a pension statement estimating the state pension you’ll get when you reach state pension age.


My pension pot is small - is it worth me taking advice?

If you have a small pension pot, the costs of taking advice could outweigh the benefits so you may want to get some guidance from the Government’s free service, Pension Wise, to understand how beneficial advice would be for you.

If you have a small pension pot, the costs of taking advice could outweigh the benefits so you may want to get some guidance from the Government’s free service, Pension Wise, to understand how beneficial advice would be for you.

Don't forget the Pension Advice Allowance could release up to £1,500 tax-free from your pension pots to help towards the cost of advice.


How can LV= help me?

At LV= our pension specialists will take you through a full review of your finances and advise you on the best option - comparing a panel of leading providers - based on your personal circumstances. We can give advice whilst you’re saving into your pension when you’re ready to take money from it, and on any final salary pensions and investments you may have.

We'll do the hard work

Finding and understanding your retirement options can be time-consuming and confusing, meaning you risk making the wrong decisions and not getting the best out of your hard-earned pension savings. By taking advice, a specialist will do all the hard work for you, and present you with options that are suitable for your needs and circumstances now and in the future.

We'll compare providers

Our advisers will compare a panel of leading providers to find the right option or range of options for you. We don’t only look at LV= products, meaning you can trust that with advice from LV=, your pension savings are being used to the best of their capability.