Pension transfer 'could be neglected'

One of the long-term effects of the current economic climate is that people are less likely to consider seeking pension transfer advice in preparation for later life.

Head of the progressive conservatism project at Demos Max Wind-Cowie said most people struggling in their present circumstances will be able to adapt by adjusting to living on a lower income level.

However, he warned this could cause many individuals to draw down on any savings they have already made, which was described as a "worrying trend".

Furthermore, the expert warned many individuals could be taking pension holidays, where they stop setting any money aside in preparation for later life.

"They think 'I can pay it back with my savings in a couple of years, for now I need to protect my living standards'. That's going to have a really shocking long-term effect on the asset inequality," Mr Wind-Cowie remarked.

This problem was attributed to the rise of a squeezed middle - with the expert claiming people who earn between £33,000 and £44,000 do not receive any support from state welfare and are very dependant on their working income.

He explained this group is unable to build assets, which is making this kind of inequality worse.

"What you need as an individual or couple in order to provide for yourselves in old age is not a really good income while you're working, but assets," the expert added.

Those who wish to avoid this possibility could seek the assistance of an adviser and assess their pension transfer options.

Indeed, director of Chapters Financial Limited Keith Churchouse recently claimed this should be done on a regular basis throughout a person's lifetime.

He suggested this is particularly essential in the current economic climate as annuity rates have been in decline for a long period of time.

Ashall Glover Financial Services, pension transfer specialists

Posted by Sarah Williams