NFU Mutual

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Coronavirus and your pension

You may be unable to afford to invest into your pension pot at the moment - we look at your options.

Ideally, saving for your future, especially your retirement, should continue as arranged – especially if you have more than a few years before retirement as you have time to recover from fluctuations in the stock market.  However, if you are now facing financial difficulties, you may be considering suspending your payments into a pension.  If so, please think about the following:

If you opt out of your employer’s scheme, in order to stop paying your minimum 4% contribution (you may be paying more), then you will miss out on:

  • any benefits that your scheme may pay if you fall ill and are unable to continue working before reaching your retirement date;
  • any benefits that the scheme might pay to your dependants if you were to die.

It is important to speak to us before stopping contributions into your NFU Mutual as you could miss out on:

  • any guaranteed annuity rates that provide for a much higher guaranteed income for life than could be obtained anywhere else in the market e. g. as available in our Deferred Annuity plans.
  • any guarantee that, for investors in our With-Profits Fund who bought pension units in Series 1 between July 1988 and July 1994, the bonus rate payable will be at least 4%. If you switch out of this fund you will not be able to switch back into it and this valuable guarantee is lost.

The tax treatment of pensions depends on individual circumstances and may change in the future.

If you run your own business, you may be struggling to make regular pension payments - what are your options?

Continuing to save for your future is important. If you're now facing financial difficulties, you may be considering suspending your payments into a pension. If so, please note the following:

  • you get at least 20% pension tax relief added by the Government.
  • if you suspend your payments then you can carry forward unused annual allowance (currently £40,000) from the previous three years. This will give you time in the future to make up for any missed contributions.
  • your pension can usually be passed on to your beneficiaries as a lump sum without inheritance tax deductions

For more specific advice and support if you run a business visit GOV.UK

I'm over 55 and considering taking money from my pension - what are my options?

The choices you make when taking money from your pension pot can impact your income both now and in the future. And, because some of these choices you make can be irreversible, it’s important that you understand all your options and the associated risks before making any decisions. If you need to take money from your pension pot to tide you over the impact of the coronavirus, then one option may be to take a tax-free cash sum by moving some, or all, of your pension pot into drawdown. You can normally take up to 25% of your pension fund as a tax-free lump sum, leaving the rest invested for the potential to grow tax efficiently e.g. if you move £40,000 into drawdown then £10,000 can be paid as a tax-free lump sum. These are the points you should consider before taking income drawdown:

  • Any income taken in excess of the 25% tax-free lump sum will be assessed for income tax. It will also reduce the amount of pension contributions you, or your employer, can make to a maximum of £4,000 each tax year.
  • You could run out of money in the future if you take too much now.
  • You’ll need to monitor your investments regularly.

The tax treatment of pensions depends on individual circumstances and may change in the future.

The decision to take money out of your pension will depend on a number of important factors including your age, health and lifestyle, the amount of money required and over what time period. If you don’t feel confident dealing with all the complexities of the decision, then please arrange to speak to an NFU Mutual Financial Adviser. Alternatively, in the first instance, if you are looking for general information then you may wish to have a free Pension Wise ( guidance session to review your options.

I'm planning to retire shortly, but my pension pot has fallen in value - what should I do now?

Don’t panic and make a rushed decision.  Over the long-term markets have recovered from major economic and political events. See our Investment pages for more information.

Your future planning will depend on your expected retirement age and whether you will stop working completely or reduce your hours. In particular, it will depend on your living expenses, health and lifestyle. If you don’t feel confident dealing with all the complexities of your upcoming decision, you can speak to an NFU Financial Adviser. 

I'm already drawing an income from my pension and I'm concerned if it falls in value - what should I do now?

It is important to recognise that when your pension pot value falls due to the volatility of the stock market, it can deplete your future income quicker than expected if you continue to take the same level of withdrawals.

So, you should immediately consider whether you can reduce your regular income withdrawals to lessen the effect of cashing in part of your fund at a low point in the market. This will also help protect as much of your pension fund as possible for any future recovery in the market. However, this can be a complicated decision that will depend on how your pension is invested, your age and your income requirements. Please consider speaking to an NFU Mutual Financial Adviser for a review of your own financial circumstances. To find out more complete this online form.