Your Pension And COVID-19
It’s April 2020, and we’re in the middle of a nationwide lockdown. All this in a bid to reduce the spread of novel virus; coronavirus. That could’ve quite literally been
the description of a new apocalyptic-style movie a few short months ago, and now it’s our reality. These short content pieces have been created to offer you some useful insight into how you can tackle and manage the impact of this pandemic on different aspects of your finances. This content is about your pension and COVID-19.
Get The Latest News & Help
Before I go any further, while this content has been created to offer you useful insights: It’s important to stay up to date on the latest from the .GOV website. And you can refer to sites like The Money Advice Service and The Pensions Advisory Service for the latest financial information & advice.
It’s also important to know that this information applies to pensions held in defined contribution arrangements. Any investment risk belongs to the sponsoring employer for defined benefit arrangements. Find out more on the difference between the two here.
Stock Markets, The Economy & Your Pension
In the first of this series of content, I wrote about how important is to be measured and considerate in your approach to your finances for the foreseeable. You can take the time to be diligent in your financial decision-making.
Although it can feel challenging at a time like this to do anything but withdraw what you can, it’s not often advisable.
Yes, stock markets have fallen and are likely to remain unstable for some time. Which probably means you’re worried and wondering whether you should be taking action on your pension arrangements.
What Kind Of Pension Scheme Do You Have?
Before figuring out what to do with your pensions, you first need to make sure you’re in-the-know when it comes to all of the pensions you have. Many of us have several pensions accumulated from employers over the years, can you be sure you have all the relevant paperwork for you pensions? Gather it together and get clear on which type of pension arrangements you have.
If You’re Retirement Is A While Away, Yet.
With several years left until retirement, you will probably be relatively unimpacted by the volatile stock market Coronavirus has caused. It’s always very likely
markets will recover, and now may even be a good time to increase your pension contributions, if your income allows for it.
If You’re Nearing Or Considering Retirement.
It’s worth finding out whether your pension scheme funds have been life styled. If it has, this means your pension will have been moved to less risky funds like Gilts, Bonds & Cash.
This doesn’t mean you won’t see an impact on your pension, but it should be less of an impact than if those funds had stayed invested in shares.
I Have My Investments In Shares But I Want To Retire, Now What?
Don’t worry. Even if you pension is still invested in shares, markets are likely to recover in time. However, depending on when you were planning to retire, it’s probably worth reviewing your retirement date. It could be a good idea to push it back if possible, or you may have to consider taking a lower income than you expected. Speak to your Financial Adviser or your pension provider if you don’t have a Financial Adviser. Find out what your options are and whether it would be beneficial to delay your retirement for the time being.
Releasing Or Unlocking Your Pension – Under Fifty-Five, Think Fifty-Five Percent Tax
You might be under the age of fifty-five and considering cashing in your pension if you’re struggling for cash during the Coronavirus pandemic.
But think carefully before you do.
While this is completely legal, firms who provide these kinds of services are not regulated by the FCA and therefore offer limited protection. You should also be aware that your pension provider will notify HRMC and you will have to pay a tax bill of fifty-five percent on the money you withdraw: Plus fees the companies charge for providing this service.
It’s not advisable to take money out of your pension pot unless you’re faced with some very specific circumstances. Learn more about pension release & unlocking from The Money Advice Service here.
Accessing A State Pension During The COVID-19 Pandemic
If you or someone you know is self-isolating and can’t get to the Post Office, somebody can be nominated to be a ‘permanent agent’. It’s important this is somebody who is trusted completely because they will have full access to the account through their own card and PIN. It means they will be able to collect the State Pension on behalf of you or somebody you know. To set this up and for further information, call the Post Office card helpline on 03457 223344.
Talk To Someone
If you are worried about your pension arrangements, talk to a Financial Adviser. And if that’s not possible, you can use the free and confidential service from Pension Wise on retirement options. You can also speak to somebody at The Pensions Advisory Service about any other pension query.
The Pensions Advisory Service: 0800 011 3797
Pension Wise: 0800 138 3944
For more information and insight on various financial topics other than your pension and COVID-19, visit my blog here to read them as they’re published. For anything else, you can contact me by email on: firstname.lastname@example.org.
I hope you stay safe and well, take care and speak to you soon.