Do the new pension reforms make Lasting Powers of Attorney even more important?
Since the Government scrapped the rules compelling people to buy an annuity at retirement twice as many people are choosing drawdown over annuities. This means they will have the responsibility of managing their income in retirement. A recent report from Zurich estimates that more than 345,000 retirees who have chosen income drawdown to fund their retirement are yet to arrange a Lasting Power of Attorney. But why do Zurich feel this is so important?
A Lasting Power of Attorney (LPA) is a legal document that allows you to nominate someone you trust to deal with your financial affairs when you are no longer able to. It is registered with the Office of the Public Guardian and will allow the nominated person or persons to deal with your finances immediately. Without it family members will need to apply to the Court of Protection to get a deputyship order, in comparison this is a timely and costly process and far more restrictive.
Alistair Wilson, a savings expert at Zurich, has said “Registering an LPA has become even more important since the pension reforms. Thousands of people are now making complex decisions on their pension into old age, when the risk of developing a sudden illness or condition such as dementia increases. Despite this, many are unprepared for a sudden health shock or a decline in their mental abilities. The time to set up an LPA is well before you need it.”
Planning ahead and having a Lasting Power of Attorney in place has always been an important part of estate planning. The report from Zurich highlights this and will help many people realise the practical issues that can arise when a person does not have a registered Lasting Power of Attorney.
The report focuses on the need for a Lasting Power of Attorney for financial affairs, however it is just important to consider a Lasting Power of Attorney for health and care decisions too. Both documents can help your family make decisions for you when you are no longer able to, whether this is paying a bill or choosing to refuse life sustaining treatment. Without these documents in place your wishes may not be followed.
Regardless of the pension reforms mentioned by Zurich, there has never been a more important time to take advice in relation to arranging a Lasting Power of Attorney.