Coronavirus has had a massive impact on everybody’s lives and we have been keen to reach out to our clients to offer reassurance and advice.
That’s why, in April 2020, we sent a questionnaire out to all our clients to discover their individual concerns and problems during the crisis, which we followed up with one-to-one conversations.
We cannot offer health advice, but we can talk to everyone and chat through their financial concerns to try to leave them feeling more positive about the short-term situation and their longer-term retirement planning.
The replies to the questionnaire threw up some common themes and we thought it would be useful to share these, along with our observations and general advice.
Not surprisingly, a significant percentage of you felt that reviewing your retirement plans had become more of a priority because of the current crisis.
As we’ve already noted in the newsletter, many people have had the opportunity to sit back and reflect on their lives and their priorities. They have been working hard for perhaps 30 or 40 years and now that they have more time on their hands, for the first time, they have been able to take stock and reflect on the future. Some have decided that there’s more to life than work and that they want to bring forward their retirement date.
For all our clients, we undertake a review of their financial situation, at least once a year, where we look at their assets, pension provision and likely outgoings in the years ahead. We discuss with them their preferred retirement date, agree what’s feasible and then draw up a plan of the steps they need to take to achieve their goals. Often we can demonstrate that maybe they can retire now, or at least that they don’t need to wait as long as they thought.
During these days of enforced rest, a lot of clients have also been reviewing their historic pension arrangements. This is sensible for three reasons.
First, you should review things from an investment point of view. Are you making the correct investment decisions? How many years are you away from retiring? We have just suffered a significant market fall, so do you need to review the level of risk you’re willing to take to meet your retirement targets?
Second, if you have lost your job, or are under threat of losing it, it’s a good idea to review your pension provider. Is there a better place for your pension and a better strategy for investing it?
At Reeves, we can pull together the information on any historic pensions and then we can provide advice as to what is the best treatment of those funds, given your aims and circumstances. There will, for example be administration benefits in consolidating a number of pension pots into one. It’s hard to have a coherent investment strategy for funds which are split between a number of different providers.
Third, if your income has been affected by the crisis, then your level of contributions may have been reduced, so, again, you should review, how this might affect your retirement plan. If you have spare resources, you might want to pay a lump sum into your pension.
On the other hand, a lot of clients are reporting that while their income hasn’t changed their expenditure has fallen. They’re not spending money on leisure or travel, for example, which could be redirected towards retirement savings. If you have had to abandon plans for your summer holiday, perhaps the money saved could be added to your pension pot.
Another common concern among our clients that the questionnaire threw up, was reviewing wills and estate planning. This epidemic has taken or threatened a lot of lives and has inevitably prompted many of us to reflect on our mortality.
We always advise our clients to make a will as a matter of priority. Now it’s even more important. Even when an estate is below the £250,000 threshold, under which the estate goes to the spouse, having a will in place can avoid a lot of problems and delays with certain insurance and pension providers. It’s also the only way of ensuring certain specific wishes and bequests are carried out.
Thanks to the coronavirus restrictions, it’s more inconvenient than usual to make a will, with high street solicitors being closed, but, at Reeves, we provide a will writing service. It involves filling in a questionnaire online which takes about 15 minutes. We can then draw the will and post it to you to sign and have witnessed.
We sent this questionnaire to all our clients to gauge their concerns and so that we could provide some reassurance during these unprecedented and worrying times. The feedback we have is that this exercise has been appreciated. We emphasise, however, that this is not a one-off. We are always at hand to answer any of your questions, whether about the state of the markets in general or your particular pension arrangements. Just pick up the phone.
These articles are for information only. These articles are based on specific clients and their situation may be different from yours. No advice should be conferred from the articles. No action should be taken without independent professional financial advice as any actions on your pension may be irrevocable and have a big impact on your income in retirement.