Most of us could use some support when making decisions about what to do to our pension pots. 

Final salary pension schemes can be straightfoward to the lucky few who have them – at retirement age they receive a percentage of their old salary every year to see them through their twitlight years.

But for those of us on defined contribution schemes, it’s rather more complicated, particularly now that the pension freedoms have come into force.

There are a number of different options available now. Turning that pot into an annuity – an insurance product which pays you an income until you die – was for a long time what the vast majority of people did when they reached retirement.

However, since the freedoms were introduced, sales of annuities have plummeted.

And as they have fallen, annuity providers have left the market, which has meant that rates which were already less than appealing have fallen still further. In fact, last year annuity rates suffered a record fall, with the average annuity return dropping by a painful 15%.

So, what are the alternatives? The pension freedoms mean you can withdraw the whole pot once you reach the age of 55 if you choose, or withdraw some of it and keep the rest invested.

But how much should you withdraw? You can get 25% tax free, but should you?

And how should you invest the rest of the pot, knowing that you are going to need that money to cover your living costs until you die?

According to the latest figures, an increasing number of people are withdrawing chunks of their pension, only to stick the money in cash accounts, potentially a disastrous move.

The answers to these questions will depend entirely on your own individual circumstances, which is why getting an expert to help you put a plan in place for your retirement funds is a smart idea.

[Read more: Over 800,000 people overtaxed on pensions. Find out how to reclaim]

Where can you get pension advice?

It’s important at this point to make clear the distinction between advice and guidance. When then-Chancellor George Osborne launched his pension freedoms, alongside that pension guidance was born too.

Pension guidance is meant to give you an idea of the different options that are open to you, and is provided by Pension Wise.

Sessions run through the possible pros and cons of each option and the tax implications, and they are absolutely free. However, they will not advise you on what is the best option for you and your circumstances.

If you want actual advice tailored to your own circumstances then you will need to see an independent financial adviser (IFA).

A good way to find an IFA in your area is with the Unbiased website – you can browse local advisers, or fill in a quick form and be matched with the best adviser for you.

How much will pension advice cost?

Different advisers will charge for their services in different ways, so be sure to discuss their fee structure well in advance.

There are a number of common charges to bear in mind:

Fixed fee: This is where the adviser charges a set fee for carrying out a specific service, for example setting up an annuity.

Hourly rate: Some advisers charge by the hour. This can vary significantly, but the UK average sits at around £150. If your adviser charges an hourly rate, it’s a good idea to establish exactly how long each task is likely to take!

Percentage of assets: If an adviser is going to be managing your investments over a period of time, they may want to charge a percentage of the portfolio’s total value.

A couple of years ago Unbiased surveyed advisers to find out exactly what they were charging for example services. Here is how those charges broke down:



Converting a £30,000 pension fund into a lump sum and annuity


 Converting a £100,000 pension fund into a lump sum and annuity


 At retirement advice on £100,000 pension pot (client requires full advice)


 At retirement advice on £100,000 pension pot (client knows what they wish to do)


 At retirement advice on £200,000 pension pot (client requires full advice)


 At retirement advice on £200,000 pension pot (client knows what they wish to do)


 Set up of a drawdown scheme on a £300,000 pension pot


 At retirement advice where the client has a £200,000 SIPP, some DB income,  £100,000  of investments and a £250,000  investment  property, incorporating estate  planning


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