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Planning Retirement Online

Retirement Pensions - What to Expect.

Personal Pensions and Financial Advisors

Part 4 - Personal Pensions


Why Plan for Retirement? links

Personal pensions operate in exactly the same way as defined contribution schemes except that your employer doesn’t contribute to the pension pot. Other than that, they work in the same way – you pay money into the pension and the money is invested for you. Then, until April 2015, when you wished to take the retirement pension, you either bought an annuity or took pension drawdown, as explained on the Occupational Pensions page of this Guide.' However, since the start of April 2015, when Pension Freedom was introduced, there is much more flexibility on how people can access their pension. Again, see the Occupational Pensions page of this Guide. You need to think carefully which organisation to trust your money with because it will be invested into the stock market.

One type of personal pension is a stakeholder pension. The charges are low, they are flexible and the minimum payment is also low. To find out more about them, go to Gov.UK - Personal and Stakeholder Pensions.

Pension Freedom

From April 2015, when ‘Pension Freedom’ started, people now have more flexibility with how they access personal pension. People are able to access them in any way they choose. Some people will still choose to purchase an annuity, so that they have a guaranteed income until they die. However, many others will choose to take lump sums out of their pension fund as and when they need or want to. Some may even take the entire fund as soon as they are able to.

There are many implications in doing this. It means that the fund may not last throughout someone’s lifetime and there will also be tax implications, depending on how much is taken in any financial year. Therefore, there are many more choices and complications for people. For this reason, everyone will be offered the Guidance Guarantee before they access their pension fund. This will involve talking through the options with an financial expert. It will not be detailed individual financial advice but will give people the opportunity to understand their choices. For more information on the Guidance Guarantee, go to Pensionwise.

Financial Advisors

Sifting through financial information regarding pensions and making big decisions such as how much of the lump sum to take, where to buy an annuity from and what sort to buy, can be quite daunting. So it may be worth thinking about talking to a financial advisor. There are two types of financial advisor:

Independent advisers

An adviser or firm that provides independent advice is able to consider and recommend all types of retail investment products that could meet your needs and objectives.

Independent advisers will also consider products from all firms across the market, and have to give unbiased and unrestricted advice.

An independent adviser may also be called an 'independent financial adviser' or 'IFA'.

Restricted advisers

A restricted adviser or firm can only recommend certain products, product providers, or both.

The adviser or firm has to clearly explain the nature of the restriction. If you are not sure you should ask for further information, but some examples of restricted advice are where:

  • The adviser works with one product provider and only considers products that company offers.
  • The adviser considers products from several – but not all – product providers.
  • The adviser can recommend one or some types of products, but not all retail investment products.
  • The adviser has chosen to focus on a particular market, such as pensions, and considers products from all providers within that market.
Restricted advisers and firms cannot describe the advice they offer as 'independent'.

The best financial advisor of any sort is someone who is recommended to you by family or friends. If you have no-one who is recommended to you and you want an IFA, go to and click on ’Find a Financial Advisor’ at the top of the page. You then enter your post code and you will receive a list of registered IFAs in your area.

Finding a Previous Pension

Many people have contributed to retirement pensions in the past but have lost the details and cannot, therefore, claim them. This is particularly true of company pensions but can also happen with personal pensions.

If you want to find a lost retirement pension, you can use the DWP's "Find pension contact details" service (you will need the name of either the employer or the pension provider) to find contact details for the pension adminstrator. You then need to contact them yourself to find out whether you have a pension, the value, and decide what to do with it.

An alternate commercial service, the Pension Tracing Service, will perform a similar service for you, but will handle contacting the schemes on your behalf and allocate a pension specialist to review your pensions. The tracing service and review are free of charge, with the hope that you will then make use of chargeable services on offer.


This article is very much an introduction to the subject of retirement pensions. There is a lot more information and advice available and the article provides links to some of it.

Decisions around retirement pensions are big ones: when to take them, how much of the lump sum to take, what sort of annuity to buy and so on. Make sure that you are fully aware of all the implications before doing anything, so spend some time researching and learning about retirement pensions.

Finally, if you’re still a bit baffled, have a look at this page on the Pension Regulator website. This provides you with a comprehensive glossary of the terms that are used and is very helpful in helping people understand retirement pensions in general.

This Guide is written by Retirement Specialist Dave Sinclair supported by members of the LaterLife team. As well as writing on retirement matters Dave is Training Director at LaterLife and responsible for the content and continuous improvement of LaterLife's Retirement Courses.
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