The new pension rules come into effect on 6 April – and the Government have recently launched their guidance website www.pensionwise.gov.uk, backed up by a full media ‘Pension Wise’ advertising campaign.

The new website offers a free and impartial Government service that helps you to understand the new pension options available – however, it will not recommend any products or tell you what to do with your money.

The site also offers the facility to be able to speak to an impartial specialist on the telephone or face to face – although this is not yet available – and is currently shown as ‘coming soon’. You can however, register your interest now to obtain an appointment for ‘early access’.

The website has received praise from the financial press and the pension industry generally, and it follows a SIX STEP approach to the guidance given as follows:

1. Check how much is in your pension pot
2. Understand what you can do with your pension pot
3. Plan how long your money needs to last
4. Work out how much you will have in retirement
5. Watch out for tax
6. Shop around for the best deal

The website also provides a number of ‘Pension Wise Guides’ under the headings of:

• Your Pension Pot
• Your Money in Retirement
• Tax
• Your Options
• Scams
• Complaints

A few of my own thoughts to finish:

1. In last week’s Budget, the Chancellor announced that five million pensioners ‘locked’ into annuity deals, would be able to sell their contract in return for a lump sum from April 2016. However, at this stage it is far from clear how this will work, and whether a market will exist in which such contracts can be cashed in for a fair market value.
2. Beware of the tax trap if you decide to cash in your pension pot in one withdrawal. Although 25% of your pension post can be taken free of tax, the remainder will be taxed at your ‘marginal’ prevailing rate of tax – which could be 40% or even 45%. By spreading the cash withdrawals over a number of tax years in retirement, it should be possible to reduce your exposure to only 20% tax instead. Also watch out for the fact that you can now pass on untouched savings left in your pension to a loved one, but if you withdraw this money before you die it immediately becomes part of your estate for Inheritance Tax purposes.
3. Watch out for fraudsters. Apparently there have already been examples of new retirees losing their pension funds – tricked into a seemingly lucrative transfer by fraudsters. Many new web-sites have sprung up offering free pension advice – and some of these are undoubtedly scams. A number are also using copycat sites trying to use the Government’s Pension Wise name or logo. So beware!

What should you do? Proceed with caution, only use the Government’s own Pension Wise web-site for guidance, and take your own independent advice from a trusted Independent Financial Adviser (IFA).