Nearly 80% of people using pension freedoms to manage their retirement income, face a potential financial crisis if they have not set up a Lasting Power of Attorney (LPA).
According to research by Zurich, more than 345,000 retirees using income drawdown to fund their retirement, have not yet given a family member or friend the legal authority to make decisions on their behalf, if they no longer can.
Flexi Access Drawdown is becoming ever more popular following the Pension Freedoms introduced by George Osborne, and Zurich estimates 1.7 million people will be using it by 2025.
It is important that all clients using Drawdown have a Property and Financial Affairs LPA in place, because in the event of a client losing mental capacity, advisers are unable to alter income payments, rebalance investments nor replenish pension cash balances to continue paying income.
In addition to pension problems, all the client’s other assets, including joint assets, are likely to become inaccessible while an application is made to the Court of Protection for a Legal Deputy to be appointed. It’s important to note that a Deputy’s powers are very limited compared to someone who has been appointed with Power of Attorney, and there is an annual fee for them to renew their deputyship.
Please speak to us to find out more about the importance of LPAs. Our sister company Bluecoat Wills & Trusts Ltd can arrange these for you if you require professional advice on this matter.