PENSION REPORT BOMBSHELL – THOUSANDS AT RISK
If you are seriously ill and need to change your pension investments OR change the amount of income, then how are the changes going to take place ?
Pension Income Drawdown is now a well-established and popular choice for many retirees, but a large majority of them are simply unaware of the hidden dangers to their families if they fall seriously ill.
Pension funds require regular monitoring , the person who makes any decisions about your pension is you. So, if you were ill, and the stock market tanked - how much would you lose , if you were unable to intervene?
If, on the other hand, the family simply needs some additional cash from the pension to pay for treatment of the pension holder, how is this going to happen?
Will the family suffer, what do you think?
A report by Zurich Group states that 350,000 people are already in this situation and income drawdown continues its popularity there could be as many as 1.4million of them by 2025.
2 Steps To Safeguard How Pension Income Drawdown Is Managed
There are two simple steps you should consider prior to safeguard your family:-
The first is to ensure you have Lasting Powers of Attorney, this allows you to appoint someone you trust - usually a family member or friend - to assist you to make decisions or to take over taking decisions for you.
The government encourages people to draft their own LPA’s online, they make it easy for you to do so. That could prove to be a false economy. It is important to draft the LPA correctly and provide the right guidance to your Attorneys (Trustees). Without quality advice, an incorrect drafting may end up costing your family more than getting it done properly in the first place.
The second step is to consider setting up a protective discretionary trust, the trust will take over as the nominated beneficiary of your pensions, and this will allow your appointed trustees to control your pension funds after you have gone.
'Thousands of people are now making complex decisions on their pension into old age, when the risk of developing a sudden illness or condition such as dementia increases.
'Despite this, many are unprepared for a sudden health shock or a decline in their mental abilities. The time to set up an LPA is well before you need it, and pension providers should be highlighting this to their customers.'
Thank you for taking the time to read my article, I hope you feel it was time usefully spent?
If you would like to learn more about how I help my clients and could help yours with estate planning, including wills, trusts, LPA's, living wills and inheritiance tax planning, please connect with me on LinkedIn or call me on 01189 347920, I'd be delighted to talk with you.
I'm also very proud to announce that my firm, Wills, Tax and Trust Limited has recently been awarded the Estate Planning Achievement Of Excellent 2018 Award by Solidus IEP Ltd. This award recognises excellent achievements in providing comprehensive Estate Planning Solutions to our clients.
We release cash for SME's AND control tax (on an ongoing basis).
6 年I received a query on this article today from my friend Michael, who wanted to know the costs of setting up a discretionary pension, and whether or not the trustees had any investment experience. The initial set up cost is quite low (but it depends how many pensions you are passing into the trust). We would suggest that you appoint your close family and friends as trustees. They do not need to be experienced at investment, as under the Trustee Act 2000 they need to ensure the funds are professionally managed. Under a conventional pension arrangement, you would make a nomination and on death the life company employee would pay out the money (regardless of your family circumstances). A flexible discretionary trust allows the trustees to time any payments out so that tax efficiency and the needs of the family are considered. I trust that answers your questions!