Updated 03 September 2020
Last month unbiased.co.uk launched a free adviser Q&A service, allowing consumers to put their queries directly to IFAs. So how’s it been going? Well, see for yourself.
MoneyFlex from unbiased.co.uk is less than a month old, yet already we’ve seen a host of tricky financial questions met with beautifully simple answers from our expert panel of IFAs. Here are some highlights from the week just gone – and a great demonstration of just how much help, support and insight you can expect from our financial advisers. What new tips will you discover?
Pension ‘guarantees’ – what are they?
One user was intrigued by the mention of ‘guarantees’ on her pension funds. She’d been told that both pensions would ‘mature’ when she was 65, but wanted to know if she could take them sooner, and what this might mean. Would she lose those ‘guarantees’ – whatever they were?
This question highlights the amount of mysterious jargon and unknown factors you may encounter in the world of pensions. One of the IFAs who responded to this question was Steve Carlson, who explained what ‘guarantees’ might mean in this context.
‘It really depends on the pensions. You may have guaranteed annuity rates on them, which could give you an annuity with a much higher income than you could get elsewhere. Another possibility is a guaranteed growth rate, which means your pension will grow by a certain amount each year. Yet another common form of guarantee is some form of guaranteed bonus at your retirement date, which you may lose if you took your pension early – I’ve seen bonuses of up to 20 per cent of your pension fund.’
Steve cautioned the user to be very careful about what she did with those guarantees, and to ask for more information from the pension providers – as she could risk losing out on something very valuable.
Can a pension ‘expire’?
An anxious Nate posted a question about an old pension pot of his. He wanted to see if he could consolidate it into his current pension – the trouble was, he hadn’t touched it for about 10 years, and was worried that it might somehow be off limits to him now. IFA Rebecca Aldridge was able to put his mind at rest – and to offer some useful guidance at the same time.
‘The good news is that pension funds can’t expire! Your pot of money will still exist, although having been left for 10 years it could probably benefit from a bit of attention. It’s a good idea to think about consolidating it, as this can make life easier and you can potentially reduce the costs and improve your investment options.’ However, Rebecca added a word of warning that again raised the issue of pension guarantees: ‘Some pensions have guarantees or special benefits that are unusual and will be lost if you transfer the fund somewhere else.’
Could I transfer into a final salary pension?
Advisers have been asked a lot lately about whether you can transfer out of a final salary pension to access a lump sum (and the answer is usually, ‘Yes, but it’s often a bad idea!’). However, in one of our most interesting questions to date, Anna broke the trend to ask if she could transfer four defined contribution pensions into her one final salary pension (now that she had already retired).
Our advisers offered some interesting thoughts here. Steve said that although some final salary schemes will allow transfers in while you are still working, it is highly unlikely that they will allow it after you’ve retired. Rebecca was slightly more optimistic, saying it was still worth checking with the pension provider. Whether or not they would allow such a transfer, she went on to make some other helpful recommendations:
‘There can certainly be some benefits in consolidating your other pensions, though. You are making a significant change to your lifestyle and your finances, and it’s important to have everything in good shape now ready for the future. It sounds like it would be a good idea to have your whole situation properly reviewed by a financial planner. They will work with you to understand exactly what income you need in retirement, and will also look at your wider financial situation, not just your pensions, to make sure everything is structured as well as it can be.’
Do I still need to pay higher stamp duty?
One user had a very quick query about the extra stamp duty on buy-to-let properties – she and her husband owned a couple of rental properties, but were concerned that they might have to pay the higher stamp duty when they sold their actual home after April 2016. Steve was able to give instant reassurance: no they wouldn’t! Main residences are not affected by the buy-to-let stamp duty.
Is a company trying to exploit my misfortune?
The most heartfelt enquiry of the week came from Val, who was very worried about her personal pension. It was invested with a provider that had been involved in a mis-selling scandal, but now a company called Costelloe and Kelly Associates had called her out of the blue, offering to come to her home to look at her paperwork and – so they claimed – help her out. Val had no idea what to do or who to believe.
The MoneyFlex advisers responded with one voice: any cold-calling company like this should be treated with instant suspicion. David Penny said, ‘Such unsolicited contact is almost always cynical. I would recommend you ask a local independent adviser to look through your paperwork and give you some guidance. I would steer well clear of anyone who cold calls you.’
Rebecca raised three classic warning signs: ‘One, they are trying to frighten you. Two, they have contacted you directly. Three, they want to come into your home. I urge you not to continue conversations with them. Meanwhile, it may be that you can make a claim against your current provider to recover any lost money.’
Steve said, ‘Don’t panic and don’t beat yourself up about this. The sales patter of these people was extremely convincing and anyone could have fallen for it. The good news is that if you have suffered a loss, then you may entitled to compensation. The Financial Conduct Authority issued a warning about these investments a year ago, because they are a lot higher risk than many people were lead to believe.’ Steve went on to explain how an IFA can help you to make a proper claim, and why ‘claims management’ companies are always best avoided, as their costs can be extortionate.
These are just a handful of the queries expertly fielded on MoneyFlex in the past week by professional, independent financial advisers – all free of charge. Do you have a financial query or anxiety? Then come and ask your questions now. The MoneyFlex advisers are happy to help.