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Published 18 November 2021

Pension advice: everything you need to know

Whether you're approaching retirement or want to understand the funds you’re investing in, you might consider getting some advice about your pension.

You spend decades saving into your pension, and when you retire you need that money to provide you with an income for life – which could be 30 years, or more. For most people it, therefore, makes sense to get pension advice to make sure our money lasts as long as we do.

In reality, the vast majority of retirees are still not accessing the pension advice and guidance available to them when making retirement decisions, choosing to do it themselves instead. A recent NerdWallet study of those with a workplace or private pension found that just 16% of those aged 55 and over have taken independent financial advice to discuss their retirement options, while only 14% have used the government’s free Pension Wise Service for retirement guidance.

This low uptake of financial advice and guidance is at odds with how confident most people feel about dealing with their pensions. Three-quarters (75%) of all those interviewed said that they do not feel confident enough about pensions to sort out their retirement planning without seeking pension advice from a professional.

Why get pension advice?

In the past, when you retired you either had a final salary pension that paid you an income for life, or you used your pension savings to buy yourself an annuity that gave you a guaranteed income for life.

In recent years pensions have got a lot more complicated. Now, when you turn 55 you can access your pension and – to an extent – do what you want with it. You can still buy an annuity, but now you can take the cash to spend as you choose, or leave it invested and use drawdown to provide you with a regular or ad hoc income.

» MORE: What you need to know about pensions

If you go into drawdown, it will be up to you to decide how much money you can afford to take out of your pension each year while leaving enough behind to last throughout your retirement. With all that freedom comes responsibility — you have to make the right decisions, or you could run out of money.

The same applies when you cash in a pension. You’ll need to plan carefully to ensure you don’t end up strapped for cash towards the end of your life.

Many people will use a combination of these options, and the way you use your pension to deliver your income may change as your retirement progresses. This is where pension advice, from a qualified pensions specialist, can be invaluable.

A professional can help you answer all the big questions about your pension, and after a thorough assessment of your circumstances put in place a plan that works for you.

In addition to helping you manage your pension, they should be able to structure your income as tax efficiently as possible.

» MORE: How to plan your retirement

Do I have to get pension advice?

If you have a defined benefit or final salary pension worth more than £30,000, and you are planning a pension transfer, you are required by law to get financial advice. The idea is to prevent people losing valuable pension benefits by making an ill-informed decision.

In other situations you don’t legally have to get pension advice, but it could be a good investment.

Where to find pension guidance and advice

You can find plenty of financial guidance online, from the guides we provide on NerdWallet to official guidance provided by the government on Pension Wise. Your pension provider may also offer information as well as planning calculators and others tools on its website. Just make sure you get your guidance from a reliable source — there are plenty of shady characters out there keen to separate you from your retirement savings through a pension scam.

For personalised pension advice you would need to speak to an independent financial adviser. You can find an IFA via the MoneyHelper’s retirement adviser directory. Alternatively, ask friends or family for recommendations.

Always check your IFA is authorised by the Financial Conduct Authority. It’s also important to establish whether a financial adviser is independent or restricted. The latter can recommend only certain products or a limited range of providers. Independent advisers are free to recommend all products and providers.

How much does it cost to get pension advice?

There are several different charging structures you could face when paying for pension advice. It could be:

  • An hourly rate: This can be £75 to £350 an hour, but the average is £150.
  • A flat fee: This could range from a few hundred to a few thousand pounds depending on how complex your situation is.
  • A percentage: This would be a slice of the amount invested, usually 1-2%.

Costs can vary hugely, but according to Unbiased the average cost for a 65-year-old setting up a flexible income in retirement, with a £100,000 pot, would be £2,000.

Ideally, the gains you realise from seeking professional advice should outweigh the cost. However, for people with smaller pots it may not make financial sense.

Where can I get free pension advice?

Pension Wise offers anyone over the age of 50 a free pension guidance appointment. It lasts up to an hour and can be done in person or over the telephone. And it’s important to note that it is guidance about your options, not advice tailored to you.

Still, it can be a good starting point, even if you plan to pay for pension advice. It will leave you better informed and help you make better use of the time you pay for with an adviser.

You can also get a free state pension forecast at This will tell you how much state pension you are expected to get, when you will be able to claim it and how, if possible, you can increase it.

» MORE: How to plan your pension

Image source: Getty Images

WARNING: We cannot tell you if any form of investing is right for you. Depending on your choice of investment your capital can be at risk and you may get back less than originally paid in.

Research methodology: The research was carried out in September 2021 for NerdWallet by market research company OnePoll. Ten questions were posed to a sample of 2,000 nationally representative UK adults about their thoughts on pensions. The results were broken down by age, gender, region and whether respondents had a pension.

About the Authors

Ruth Jackson-Kirby

Ruth is a freelance journalist with 15 years of experience writing for national newspapers, magazines and websites. Specialising in savings, investments, pensions and property.

Read More
Richard Eagling

With 24 years’ experience in personal finance, Richard Eagling is an accomplished journalist, editor, media commentator and expert in all things finance, pensions, life insurance and investments. Having cut his…

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