Pension: How will the current financial climate affect your pension? Expert offers insight

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Pension saving often involves a lot of forward planning, with key decisions having to be made at particular times within a person’s life. However, due to the economic and financial disruption brought about by coronavirus, many savers have expressed uncertainty in the current pension market. It is feared pension savings could potentially be at risk, and a significant number of savers are looking for ways to secure their pot for retirement.

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Pensions are often a lifeline for hard-working Britons who are departing their professions for a well earned retirement.

But reliance upon private and personal arrangements, alongside workplace pensions is gaining traction.

The State Pension is increasingly viewed as a safety net, and additional savings may be necessary for peace of mind.

As financial circumstances change amid the COVID-19 crisis, Express.co.uk spoke to Peter Wood, Partner at Prudential Financial Planning.

Mr Wood discussed the current pension climate and what moves savers can make at present.

He said: “Due to the impact of COVID-19, uncertainty in the markets is likely to remain for some time. As some investments will suffer, opportunities for others will arise.

“It is important for most people who are approaching the time to make a decision about their pension to take appropriate advice from a suitably qualified professional. 

“It is certainly a good idea to review your pension at this time; a client’s need to withdraw a lump sum or take an income will often dictate whether they are in a position to consider deferring, or not. 

“I would only advise my clients to take their pension if they had a need to.”

Due to the adverse financial situations brought about by the crisis, many are finding it necessary to dip into their pension pot to help tide them over.

In fact, a recent study undertaken by Opinium of 2,002 UK adults showed 11 percent had been driven to considering or actioning using a proportion of their pension to assist them at this time. 

However, Mr Wood advises people to think carefully before taking this action.

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When asked whether he would caution anyone currently taking money out of their pension to cover the cost of coronavirus, Mr Wood added: “Yes, although unfortunately some clients will have little choice.

“These are unprecedented times, hence I always use sustainability modelling to check what impact withdrawing funds now would have.

“This will give an indication of whether taking funds now is likely to cause an issue later on in life, and if so, what we could do about it.

“This might include things like deferring retirement, or, if possible, increasing contributions into a pension when things return to normal.”

Pensions are considered to be long-term investments, with anyone making a decision urged to consider their options carefully. 

Consulting a financial adviser can often be a sensible option for many individuals looking towards retirement.

The Pensions Advisory Service, sponsored by the Department for Work and Pensions, says making decisions about your pension based on short-term events and circumstances can have long term consequences.

As a result, they advise savers to contact them or the Money Advice Service for further assistance. 

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