Since October 2012, the government has been rolling out its "workplace pensions" initiative.

By 2018, all employees who meet certain age and wage criteria will have been automatically enrolled into a pension scheme run by their employer. Employers and (in most cases) employees with have to make contributions to their scheme.

Whilst this is obviously an expense, most people are now aware of the need to make personal provision for their retirement.

Although the state still provides reasonable pensions for those with sufficient National Insurance contributions, additional provision is still needed if people are to enjoy more than the most basic lifestyle in retirement.

So workplace pensions should be great news. But there is a problem!

Many people have been put off investing in pensions over the years. There are several reasons and we won't go into the history but the most common objections include:

  • I have to hand over my pension fund at retirement to purchase an "annuity" (a guaranteed income for life) which may be very poor value for money
  • If I die young the pension company keeps my fund
  • Even if there are any death benefits paid to my loved ones, the tax man takes a huge slice
  • Pensions are not accessible. It's my fund, I've saved for it, but I can't have it when I want it.

But there is excellent news on the horizon!

In addition to the workplace pension initiative, the government is about to give pensions one of the biggest shake-ups since the war.

All the concerns and objections above are apparently about to be removed.

  • It will not be necessary to purchase an annuity
  • Once you get to retirement age you will be able to access your fund however you like
  • If you die young, your fund can be passed to loved ones without the tax man taking anything

Along with the workplace pensions initiative, these new rules will change pensions almost beyond recognition. Suddenly pensions are once again a very compelling way for securing one's lifestyle in retirement.

If you are an employer who would like to know more about your responsibilities, or if you are thinking about your future and would like to know how these changes can benefit you in retirement, then please contact Ardent today for a free chat.

Gary O'Brien is a chartered financial planner and a director of Ardent. He is a pensions and business planning specialist.

Mark Fisher is also a director of Ardent and he is our workplace pensions specialist.

For more information contact Ardent:

01904 655 330

www.ardent.com