In April 2015 the tax rules were changed to give people greater access to their pensions. As a result, more people can now benefit from income drawdown schemes that historically have been limited to the wealthy. Many people are choosing income drawdown due to the flexibility and tax advantages it offers. However, unlike an annuity, income drawdown requires you to be able to manage your financial affairs throughout your retirement. You make the decision about what income you access and when. If, through ill health, you are no longer able to make these decisions, you will not be able to continue drawing income from your pension. Not even your spouse would be able to access your pension fund, or other investments, on your behalf.
To avoid this, you would need to have put a Property and Finance Lasting Power of Attorney in place. This important legal document allows you to state who can step in and make decisions for you if you can’t. This would ensure that your pension income can continue, and avoid unnecessary problems at an already stressful time. At Nicola Sunderland TEP we recommend that anyone with pensions, or other investments, protect themselves and their family by putting this document in place. Legal advice is necessary to ensure that the document is correctly established. It costs just £250, and the rewards in doing so are tremendously valuable.
An Lasting Power of Attorney is a critical, but often neglected, part of a sound financial plan and not having one often results in unsatisfactory and upsetting outcomes. You can avoid a lot of these potential problems if you simply plan ahead and make a Lasting Power of Attorney. Hopefully with a little awareness, those of you who do not have a Lasting Power of Attorney, will start thinking about getting one.