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Succesive Governments have strived to simplify pensions usually resulting in greater complication. As legislstion is passed on pensions it sits on top of existing rules and therefore creates most of the complication. For example company schemes in the UK have three regimes:
Pre 1987
1987 to 1989
Post 1989
These regimes all have different rules and can cause a great deal of confusion.
The area of private pensions is more straight forward but there are still many pit falls awaiting the unwary.
A Govt green paper that is expected to pass as law in 2005 will it seems place a degree of simplification on the pension landscape but without a doubt advice on the best route to take with pension planning is a must.
Not only is it important to understand which tyopes of pension you are allowed to use and how they interact with each other but serious consideration should be given to:
1. Charges - how much does the provider of the pension and any adviser wish to charge me?
2. What sort of performance in terms of rates of return can I expect?
3. Are there any guarantees attached to the plan?
4. What if I die before I retire?
5. What level of risk do the different assetts that can be held in a pension carry?
6. Can I stop and start contributions?
7. Are there any penalties?
8. How do my existing plans interact withy any new plans?
9. Should I add to existing plans?
10. Would I be best to transfer my existing plans to different provider?
11. Would I be best to transfer my existing plans to different plan type?
The list of course can go on and on. The important thing is to seek and get good advice. The links on the right are some good sources of advice and information.
Obtaining good quality advice is usually cheaper in the long run than not taking advice!
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