Pension Income Drawdown is now a well-established and popular choice for many retirees, but he majority of retirees are unaware of the hidden dangers to their families if they fall seriously ill, if you have a pension please look out for the report from Zurich – Pension Report Bombshell- thousands at risk!
Pension funds require ongoing management. So, if the person who normally makes decisions about their pension is ill, what would happen to the value of a pension if the stock market crashed?
If, on the other hand, investment markets are generally positive, and the family simply needs some additional cash from the pension to pay for treatment of the pension holder, how are they going to get their hands on the money?
If the person that normally directs that investments within the pension require change or the income withdrawal amounts need amendment is ill, then any urgent action required with their pensions will not take place. Will the family suffer, what do you think?
Zurich Group states that 350,000 people are already in this situation and income drawdown continues its popularity there could be as many as 1.4 million of them by 2025.
There are two simple steps you should consider prior to any emergency situation arising: –
The first is to ensure you have Lasting Powers of Attorney, this allows you to appoint someone you trust – usually a family member or friend – to assist you to make decisions or to take over making decisions for you.
A word of warning is required, the government encourages people to draft their own LPA’s online and make it easy for you to do so. If you want to save money that is an option, but not a wise one in our opinion. It is so important to draft the LPA correctly and provide the right guidance to your Attorneys (Trustees).
Getting the drafting wrong may end up damaging your family emotionally and financially.
The second step is to consider setting up a protective discretionary trust, the trust will take over as the nominated beneficiary of your pensions, and this will allow your appointed trustees to control your pension funds after you have gone.
‘Thousands of people are now making complex decisions on their pension into old age, when the risk of developing a sudden illness or condition such as dementia increases.
‘Despite this, many are unprepared for a sudden health shock or a decline in their mental abilities. The time to set up an LPA and Flexible Pension Trust is when you don’t need it, NOT when you need it, by then it’s too late!