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- Looking Ahead: The Process Leading up to Your Retirement
Which is Best Prepaid Funeral Plans or Funeral Insurance?We have this morning release an article exploring which provides the best value for money and family protection. We are constantly being asked by our customers what the difference is between prepaid funeral plans and funeral insurance, so we felt that you may find it useful to read the facts, so that you can decide for yourself… The answer is simple! Go to http://uk.prweb.com/releases/2015/08/prweb12897742.htm and have a read, it provides all the information that you will need and also gives you the opportunity to request your own Free copy of our later in life planning guide to help you understand all the things that you need to think about as you approach your retirement years or in preparation for them.
Funeral plans have two distinct elements:
- Firstly, the funeral director’s costs, which consists of limousines, the coffin and hearse, plus information and advice on how the service will be conducted, based upon your wishes. These costs are generally guaranteed so they will not rise through the term of the plan.
- Secondly is the third party costs, which consists of cremation or burial fees, minister fees and any doctor’s costs incurred. It is important to note when making a prepaid funeral plans comparison, that some policies do not cover all third party costs, but offer an allowance.
- One off payment – A single payment made at the beginning of the plan to cover all costs. These can be made by credit or debit card.
- Pay within 12 months – Using this method allows you to spread the cost without incurring extra charges.
- Monthly instalments – This is a long term commitment over a designated timescale. There are extra costs involved with this method which you need to consider but there is no initial large cash outlay. There is also the Fixed Monthly Plan option which is paid for life (or until 90th birthday). However, cover for services is payable after two years.
There are many instances when one may wish to release pension funds. A medical condition may dictate that more liquidity is required or perhaps a husband and wife hope to purchase a new property. These are two of the reasons why proper pension release advice is critical in making the correct decisions at the appropriate times. So, let us examine some pension scheme rules as well as clarify how to release pension funds when the time is right.
How to Unlock My Pension: Primary Considerations
It should first be noted that you must normally be more than 55 years old in order to unlock your pension. However, there are instances when those who are quite ill may be able to access these funds earlier. It should also be mentioned that such an early release before the pension has matured may not be enough to get you through the remainder of your retirement. Be careful when choosing this option. Some other questions that are worthwhile addressing are:
- Will you be sacrificing ill-health or death benefits?
- Are any penalties associated with an early release?
- What additional charges will need to be paid (such as a third-party adviser)?
Important Pension Scheme Rules
First of all, the total of all of the funds must not exceed £30,000 pounds. Note that this does not include any contributions from your state pension. When you meet these requirements, you may be able to withdraw your pension in a way known as a “trivial commutation” or a “trivial lump sum”. There is another option known as a “small pot”. This is associated with the liquidation of funds assuming that they are less than £10,000 pounds. In the case of the small pot, you will not lose any other pension benefits that may exist alongside the funds. In either of these cases, a grave health condition can allow you to enjoy this money before you reach the age of 55 (assuming an early retirement).
As long as benefits are not included in the payment, you will be provided with the possibility to take no more than 25 per cent of the pension in the form of a tax-free lump sum. However, the remaining 75 per cent is considered taxable income. This will depend upon the year in which the funds are withdrawn.
This guide to pension release options also needs to mention that you should be wary in regards to third-party offers. Many companies are rather dubious in regards to their terms and conditions. In fact, some are not authorised by the FCA. This can present a very real danger. They will often charge extremely high fees and they may require you to “invest” a portion of the money into risky schemes such as overseas property or unregulated markets. These should be avoided at all costs. Not only can you lose a sizable amount of your pension, but the FCA can do little in terms of remuneration. This is relevant pension release advice that should be taken very seriously.
Of course, you can also type in a search term such as “how to unlock my pension” and view the results. However, we at Silver Choices are more than happy to provide you with further information and point you in the right direction. You have earned your pension and such extra funds can be a great way to enjoy the rest of your life.
- Is it for everybody
- Do I need to do anything with my pension
- What can I do with my pension
- Will I benefit from any changes
The new Rules only apply Private or Workplace PensionsFirstly, for those seeking pension release advice, the new rules only apply to private and workplace pensions. State pensions and state retirement ages remain the same. Although most providers have their own pension scheme rules, to be able to access your private or workplace retirement pot(s), you need to be 55 years or older to release pension funds. The only exception to this is if you are suffering from extremely poor health, and this definition will again depend on the provider’s pension scheme rules. There are companies offering ways to get round this, using off-shore accounts and international banks. They send out spam mail or emails entitled something like ‘How to Unlock my Pension’ and painting a picture of retirement at 40/50. These are illegal, and if things go wrong could cost you your retirement pot, stay safe and keep away.
Releasing Pension Fund Cash Options at 55Once you reach the age of 55, you have a number of options available.
- Leave your pension as is until you retire
- Draw 25% of your pension pot tax free
- Organise a flexible income for your retirement
- Take smaller amounts from your pot
- Close your account and draw your whole pension pot
When Would You leave your Pension as isFor many, paying their monthly contributions and leaving their pot to increase is all they want. Should finances be tight though, maybe shorter working hours or other debts, then the pot can be ‘capped.’ This releases the plan holder from further contributions, while the pot continues to accrue interest.
Draw 25% of your Pension PotOnce you reach the age of 55 years, you can draw up to 25% of your pot as a tax-free lump sum, and convert the balance into a lifetime annuity. This will provide you with a regular taxable income for life. While you use the lump sum to pay off or reduce your mortgage, add an extension to your home, or have that holiday of a lifetime. Lifetime annuities differ from provider to provider, and an in depth guide to pension release should be sought from professional independent advisers.
Organise a Flexible IncomeOrganising a flexible income again allows a tax-free lump sum drawdown, but gives the option of you stating the retirement income you want, and re-investing the balance into various funds. With this type of scheme, a professional guide to pension release is of paramount importance as there is no guarantee of continuous lifetime income.
Using your Pension Pot as a Savings AccountAnother option to release pension funds is drawing small amounts as and when needed. The first 25% of each withdrawal remains tax free, and the balance continuous to accumulate interest. However, much again depends on good pension release advice as the balance isn’t guaranteed to provide a regular income on retirement.
Take the Money and RunThe last option is releasing pension fund cash, draw all your pot, unless you’re in a very strong financial position, not necessarily the best of ideas. That said, making enquiries regarding how to unlock my pension is a good idea. Being able to release at least some funds can make retirement for many a much more attractive prospect. Mortgages can be paid off, debts reduced and funeral plans taken up to release pressure on family. If You would like to consider getting all the legalities out of the way first when you release your pension fund, ten companies such like the funeral plan comparisons experts at Silver Choices can provide a whole plethora of advice on all things financial, and point you in the direction of a more secure, happier retirement.
The Telegraph that the average cost of a BASIC funeral falls between 3,000 and 4,000 pounds. There are two problems with this estimate. Firstly, many feel that this figure is more on the order of 5,000 pounds in 2015. Secondly, these prices do not take into account other metrics such as flowers, funeral director costs, the rental of a venue and any transportation needs. So, it is clear that there is a wide spectrum of services to choose from. What are some of the benefits that a thorough prepaid funeral plans comparison will offer you and your loved ones?