If you’re in the 60+ age bracket at the moment, you might be worried about your pension. Not just the usual worries about if you have one and if it’s the right plan – but how the current pandemic could impact your pension fund. After all, most pensions are mainly made up of a collection of investments, and with the markets having fallen in recent months, investments are likely to remain volatile for a while. But how does this impact your pension planning, and should you be taking action?

If You’re Worried About the Value of Your Pension

It’s important to remember that pensions are long term investments, so while there might be a short-term impact as a result of Covid, that doesn’t mean the overall value of your pension will be reduced by the time you come to use it. If you still have several years before you’re planning to draw on your pension, then there are several years for the stock market to recover from the fluctuations happening now and in the immediate future. So while the value of your pension might be fluctuating right now, our advice is to try not to worry about it too much, and instead come back and re-evaluate once the pandemic is over and the world has settled into a new normal. At that point we will have more information, and a better idea of what the stock market is doing, so you can be sure any changes will actually be beneficial in the long term, not just the short term.

If You’re Over 55 and Considering Accessing Your Pension

This is the group with the most concern right now – those who are either considering accessing their pension and retiring, or who are already living on their pension now. Depending on when you’re planning to retire or withdraw money from your pension fund, you might have to consider taking a lower income than planned.

If you decide to try and access your pension savings now and take a big chunk out, then you might miss out on any increase in value if the markets do recover. There’s also the tax implications of that to consider. You can normally take up to 25% of your pension pot tax free, but if you want to take more than 25% then there are tax implications. So withdrawing more than 25% of your pension fund might seem like a safe bet, but it might end up costing you more in tax, and limit how much you can pay into a pension in the future as well.

It’s also important for you to consider all of your sources of income before you make any decisions about your pension pot. After all, if you take money from your pension now, it could have an impact on your eligibility for any income-related benefits, like universal credit or pension credit, which could have a knock-on effect on the amount of money you have to live on.

Scams

Of course, there are always bad people out there wanting to take advantage of scared, vulnerable people. So it’s no surprise that there have been a number of new pension scams popping up. Pensions scams can take many forms, and often appear to be a legitimate investment opportunity, or offer you the chance to cash in your pension before the age of 55 (which just isn’t possible). The virus has been like a payday for many scammers who want to liberate your pension fund from you. In fact, Action Fraud reported a 400% rise in coronavirus-related fraud in March, with many of the usual methods of pensions fraud still being used. The difference is that while their methods (cold-calling targets) are unchanged, potential victims are less on their guard as they adjust to all interactions being done by telephone. So right now its more important than ever to be on your guard, and don’t do anything with your pension without speaking to your own financial adviser first.

The most important thing is to not panic and make rushed decisions about your future just because things look bad right now. The pandemic will pass and the markets will recover, if given enough time. But the decisions you make could have a huge impact on your ability to live comfortably later in life. While we don’t have the ability to predict the future, the team at Chilvester Financial are here to help guide you through the ups and downs of the current pension landscape, and help you create a pensions strategy that is right for you, and will provide for you in the months and years to come. If you would like to find out more, just get in touch with the team today, and we would be happy to help.

The current Covid-19 pandemic has changed a lot of things in the world. In particular, it’s prompted a lot of people to do things they had been putting off for a long time (and not for very good reasons) – like getting their wills written. In fact, Coronavirus has prompted a 76% jump in demand for wills and will writing services across the UK. But why has it taken a pandemic to make so many people realise they need a will in place, and how valuable a little estate planning can be to the future of their loved ones?

Many experts think the reason is simple – that death is scary, and if you don’t think about it, then you don’t need to live with the fear. While this might be true, the reality is the frightening death tolls, along with more people than ever risking their own health to help others, having a will in place has become a necessity. An important part of writing a will is planning out what will happen with your money and belongings when you die, otherwise known as estate planning. If you haven’t thought about it before, it can seem pretty complicated. So here are a few things you should think about when estate planning during the Covid-19 pandemic.

Choosing Your Powers of Attorney

When drafting up an estate plan, there are generally 3 documents that you will need in place, which all require someone else to action on your behalf. These are a Lasting Power of Attorney (one for money and one for medical), and a will. You will need to put some careful thought into who you appoint for these roles, particularly when it comes to your Lasting Power of Attorney (LPA). An LPA only comes into effect when you lack the capacity to make decisions on your own. This could be because of something like dementia, or it could be because you are critically ill and unable to communicate, as some Covid patients have been. If this should happen, then the people you have chosen as your attorney can make decisions for you, in line with the powers you give them.

You can choose different people for different LPAs, or you could have attorneys on one document (for example, if you have 2 children), with the requirement that they both agree before an action is taken, or that one can make decisions if a professional is in agreement (usually found in medical LPAs). You can choose who you want to take on these roles and what you want them to be able to do, and while you are alive, these documents stay in effect.

Your executor for a will only comes into play after you die, and it’s their job to make sure your will is carried out accurately and your wishes are followed. Like the LPA, this should be someone you trust, but many people choose someone who isn’t family to take on this role. In fact, a lot of people choose 2 executors – one family member, and one impartial professional like a solicitor – to ensure someone impartial is involved, as emotions can run high. If you’re not sure who you should choose, we recommend you seek some professional advice.

Succession Planning

If you run a business, then it will form part of your estate. How this is handled will depend partly on what kind of ownership you have – if you are the sole owner then this can be relatively simple, but if you own shares, or are in a partnership, then this will need some careful planning and discussion – and this is something you should definitely seek professional guidance for. Succession planning might seem like it’s a completely different ball game, but it forms an important part of estate planning for business owners.

Gift and Tax Planning

Then we have tax. Inheritance tax is a minefield, but estate planning is a great way to lower the amount of tax you pay when you die, and increase the amount of money available to leave to your loved ones. There are a number of ways you can use estate planning to maximise tax savings, from gifting money and assets that do not qualify for inheritance tax relief now, to setting up trusts to keep pots of money set aside and secure, ready for those who will need them. Gifting is also a great way to watch your loved ones enjoy part of their inheritance – but you do need to be careful about how you do it. We recommend talking to an expert about how you can utilise gifts and plan your tax efficiently, so you don’t end up paying a lot of money to the tax man.

Talk to An Expert (Virtually)

While in-person meetings are still a no-go, that doesn’t mean you can’t seek expert advice when planning your estate. A financial planner will be able to support you through this challenging topic, and help you create a plan that is unique to you, gives your family and loved ones the support you need and most importantly gives you a sense of security and peace of mind. Virtual meetings, either by video or over the phone, are a great way to talk through what your estate actually looks like, and what the best and most efficient way to handle it is. That’s something that an online write-your-own-will kit just won’t give you. Plus, once you have your estate plan in place (which is the bulk of the work), writing your will is actually quite straightforward.

At Chilvester Financial, we have experts in estate planning on hand, waiting to help you create a plan that truly reflects you and your wishes. Our job is to make sure your money goes exactly where you want it to and doesn’t all end up in the tax man’s pocket. We can also ensure your estate is tax efficient, so you can leave more to your loved ones as well. If you would like to know more about our estate planning service, or want some advice on planning your own estate, just get in touch with the team today, and we’ll be happy to help.