Don’t sleep through the changes in your pension statement

Wake-up packs and how NOT to lose sleep over them

“Pensions Statement” is possibly the right word for those of us who have thought about these things. Wake-up pack feels a little more like a hysterical last minute plea!

However, whatever your thoughts on the name, as of Friday 1 November 2019, The Financial Conduct Authority (FCA) has determined that every pension customer should receive a Wake-up pack, from the age of 50 onwards. The pack will be provided by the pension provider and will contain a one-page summary of the pension details and should be updated every five years until the pension is eventually cashed in.

The one-page summary will include:

• The value of your private pension
• Your assumed retirement date
• The contributions made that year by you and your employer
• General information on retirement planning

All Wake-up packs will also carry a risk warning that is tailored for the individual that the packs is being sent out to. So as you will imagine, the risk warning to a 50 year old will be different to that of someone who is 75 years plus. These warnings will be tailored according to the information that the pension provider holds on the client receiving the pack.

Although providers will have free rein to include whatever risk warnings they want, most will cover the risks of pension scams, contributions and investment risk as well as an explanation of tax issues.

What’s the big idea?

The motivations and idea behind this new wake-up pack is to encourage you to consider your approaching pension and to give you the time to put more money aside to cover your retirement, if it seems necessary.

The wake-up pack will also contain information regarding the Government’s Pension Wise Service. Along with a summary of the possible advantages of shopping around when purchasing a pension in the first place, as well as the best practice to follow when exploring this. Assuming you haven’t already covered all of this off with your Financial Adviser.

Packs will start to arrive:
• Within two months of you reaching your 50thBirthday
• Four to ten weeks before reaching the age of 55 years
• After 55 they will arrive every five years until your pension is cashed in

Additional triggers for the packs are:
• When you ask for a retirement quotation (if it’s more than six months before you intend to retire)
• When you are considering, or have stopped, an income withdrawal arrangement
• When you decide to take further benefits from your pension.
• When you request to access your benefits for the first time

Although packs do not need to be sent out, if you have already received one in the last year. Which is good news for the trees, as all wake-up packs must highlight that guidance is available from Pension Wise and, apart from the one sent at aged 50, will also have to be accompanied by a brochure from the Money Advice Service.

So has your financial adviser been asleep then?

You would assume that all these issues and more would have been taken care of by your financial adviser – and in most cases, you’d be right (depending upon who your adviser is).

So don’t worry, as these new requirements are mainly aimed at helping non-advised clients make better decisions for themselves. If however there is anything in your wake-up pack that you have any questions about, then don’t hesitate to contact your adviser and ask.

As always, if you have any questions regarding your current or future pension strategies, then please contact us at Bridgewater Financial Services where we will be delighted to help.

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