Selling Your Pension: What You Need To Know
In light of the recent changes surrounding pension unlocking, many people will be asking themselves the question, “Can you sell your pension?” and the answer will soon be Yes! Pension sales are about to become available from next year, adding to your pension pot options, and the deal will no doubt be an attractive one to many people who are in or approaching retirement age.
Many people who consider their plan to be less than they need to live on are already considering chopping in their pensions and transferring the money over to other, more lucrative investment opportunities such as buy-to-let. This change in the way their money works for them is hoped to bring about a more prosperous future for them and their families.
What’s Changing?
The second hand annuity market comes into force on 6th April 2017 and will allow those who have a pension to sell it to buyers who will evaluate the amount that they think that the plan is worth before offering the seller a set price. This will give pension holders the freedom to make the decision that they think will suit them best about their own money and future.
However, it is important to remember that selling up a pension may not always be the very best option available to you, so a certain degree of due diligence, research and advice seeking is necessary before jumping in. Failing to engage in full research and getting the right guidance may result in significant risks to your financial future, so it is absolutely vital that you take care when making your final decision over whether or not selling your pension is actually the right thing for you.
The Cost Of Selling
There currently is no industry standard fee when it comes to selling pensions and there are still doubts over what the exact cost will be. As with any financial transaction such as this there are likely to be significant costs involved here, with things such as getting health checks carried out, seeking professional advice, the cost of any administrative work and the overall profit margin incorporated into the offering by the buyer all having to be taken into account.
Who Do I Sell To?
Who you decide to sell your pension to will be largely left down to you, but again it is worth repeating the importance of seeking good, professional advice before you settle on a buyer for your annuity. Bear in mind that any financial institution will be legally able to offer you a deal on your pension, so you really should be able to shop around.
The market will undoubtedly be heavily regulated and monitored, but this should not lull anyone into a false sense of security – there will be scammers who’ll try to part you from your pension. Doing your own homework and seeking financial advice will help you determine who to sell your pension to.
What Will I Get?
What you will receive for your pension is very much going to be dependent on individual circumstances and that of the market. Things such as your health, age, the type of annuity that you hold and the current rates of interest that the market are offering will all have an effect on the final amount that you will be offered by the buyer.
Selling your pension is not something that should be taken lightly. Make sure that you do your research and get professional advice before you decide to cash in your pension and discuss the arrangement with those closest to you. If all goes well, selling your pension could free up a considerable amount of cash for you to reinvest or do with as you please.
Aaron Jones runs Sell Pension, the UK’s premier pension selling information website that helps connect people who wish to sell their pension pots with pension review experts.