Pension advice, from first review to last payday

The questions that bring people to an adviser

Pension questions tend to arrive in a particular order. In your thirties and forties it is usually whether you are paying in enough and what to do with the pots left behind at old employers. In your fifties it becomes whether you can afford to stop, and when. And at the point of retirement it is how to turn the money into an income without paying more tax than you need to, or running out.

None of these has a standard answer, because the rules reward different things for different people. A higher-rate taxpayer gets 40% relief on contributions; someone with income above £200,000 may have their allowance cut; someone with a final salary scheme has a guaranteed income that is expensive to give up.

Bringing old pensions together

The average person has around eleven jobs in a working life, and many have a pension from most of them. Combining them can cut charges and make the whole thing easier to manage, but not always. Older policies sometimes carry guaranteed annuity rates, protected tax-free cash above 25%, or a protected pension age, and a transfer gives those up for good. An adviser checks each one before anything moves.

For defined benefit pensions the rules are stricter. If the transfer value is over £30,000 you are required to take regulated advice first, and for most people the right answer is to stay where they are.

Turning a pot into an income

From age 55, rising to 57 on 6 April 2028, you can normally take a quarter of your pension tax-free and choose what to do with the rest: leave it invested and draw on it, buy a guaranteed income with an annuity, or combine the two. With annuity rates far higher than they were a few years ago, and unused pensions being brought into inheritance tax from April 2027, the balance between those options has shifted and plans made even three years ago are worth revisiting.