The fact is if you have a UK Pension holder you are at considerable risk of losing a significant chunk of it. A number of factors have come into play that has made UK pension funds vulnerable. From market forces, historic pension schemes, and poor executive management, could see you lose a significant chunk of your pension fund.
In this post, we look at scenarios where this can happen.
Company goes Bust
If the firm you work for or have worked for goes bust your pension will be put at risk. BHS is a good example where a pension deficit had to be rescued by the Pensions Protection Fund (PPF). Although many former BHS employees will not lose everything, those that were expecting a pension greater than £30k per year will be disappointed. Pensions bailed out by PPF are capped at £30k per year.
Bad management and recession all take their toll on businesses even ones that have seemed to be with us forever. The older the business, the more likely your pension will be at risk should the business go under.
Meddling by MPs
Historically MPs have meddled in pensions since their inception. There have been three big significant pension reforms in the last ten years: Auto-enrolment, Pension Freedom, and the new State Pension. All of these have been or will be tinkered with as time goes by.
Pensions are an area of great expense and successive chancellors have all tweaked pensions. Older people are more likely to vote than younger people, and as such pension changes are going to be a fact of life for us all.
This means that relying on a planned weekly state pension amount for when you retire is at best premature.
‘Rip-off’ Charges
High administration fees for pensions are still a reality of life. Although a 3% administrative charge does not sound excessive, over time this could cost your fund thousands come retirement day. Some better performing pensions do have a 3% charge, but most should not be this high.
Stock Market Performance
If you have a defined benefit scheme then your pension fund is dependent upon good stock market performance. That said, should the markets crash and you are quite a distance from retirement, you have little to worry about as your pension will be buying stocks at a cheaper price. As time passes and the market recovers the value of these stocks increases giving you a greater return come retirement day.
However, if your retirement is around the corner the market has little time to recover. This could impact your retirement fund significantly.
Scams
Pension scams are sadly a reality of life and they are hard to spot. A recent Citizens Advice survey showed 2000 respondents three ads for pensions which they had mocked up. Some were clearly fraudulent making unrealistic claims. They asked the respondents which one they would choose for pension advice. Astonishingly, 88% chose a fraudulent ad, with 64% selecting an ad which promised an unrealistic return of 15%.
Experts tend to agree that those out to swindle now have a better hunting ground thanks to pension freedoms.
Financial Adviser Fees
Many financial advisers that charged exuberant fees have been curtailed thanks to legislation changes in 2013. This ended the days of advisers pushing products that had the best commission and the changes now demand higher qualifications to practice financial advice. Most of this mis-selling in this regard was conducted by the banks. Many banks have now stopped offering advice.
Nonetheless, if you are unlucky you may find an unscrupulous financial adviser. It is best to go with financial advisers with good reputations and avoid cold callers.
How can I protect my UK Pension?
It is essential if you have a UK pension that you seek good financial advice. My services are award winning and can help keep your pension fund secure. Using a selection of sound financial products, I can ensure that your pension is at less risk to those factors stated above, and you have solid numbers to plan your retirement. Click here and complete the Call Back Service form to get started.
Sources:
Mail Online
Mail Online
Daily Telegraph
For more information, please contact Michele Carby at Holborn Asset Management on +971 50 618 6463 and on e-mail at [email protected]
