Understanding Your Pension During Uncertain Times

18 November 2020

Recently, there has been more uncertainty in our lives than usual, and many people are thinking more about their financial futures than before. If recent events have got you thinking about how different situations could affect your pension, the following information may answer some common questions asked when people have a change in circumstances.

What Happens If I Become Ill?

Normally, the earliest you can start taking your pension in the UK is at 55; however, if you retire early due to serious ill-health, you may be able to access your pension earlier. Although all pension scheme rules vary, you will need a medical certificate to prove that you are no longer able to perform your job duties. You will also need to bear in mind that taking your pension early will mean reduced payments later on. If you have a personal pension, you are able to name a beneficiary to benefit from your pension should the worst happen to you.

What Happens If My Financial Circumstances Change?

If you are made redundant, this will likely affect the amount you are able to contribute to your pension. It may also affect your state pension, as you need to pay National Insurance contributions for a set number of years to qualify.

Your pension is not classed as an asset and therefore is protected if you are made bankrupt. However, your pension may affect your ability to file for bankruptcy.

If you are unsure what your personal circumstances mean for your pension, you should consider a free pension check from a company like Portafina, who can offer advice, as well as check and manage your pension.

What Happens If I Go Through a Major Life Change?

If you go through a divorce, your state pension will remain yours; however, any personal or workplace pensions are open to court ordered sharing if an amicable agreement cannot be reached.

If you decide to enjoy your retirement in another country, then you are able to access your pension from the UK, or you can transfer it to the country you are living in, although there may be fees to consider for this.

What Happens If I Start a New Job?

Your existing pension will still be available if you enter new employment, and your new employer also has a legal obligation to enrol you on their workplace pension scheme, provided you meet certain requirements. Although you can opt-out of a workplace pension scheme, not many people do this as it is effectively free money from their employer.

Everyone’s circumstances are specific to them, as are their pensions, which is why it is important to know exactly which rules apply to your pension. Make sure you know which type of pension you have and which rules apply. If you feel your pension does not suit your needs, you can look into transferring it to a different scheme.

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