Pensions
Pensions always appear to be in the media spotlight. The fact is that using a pension to save for your future is still the best way to provide yourself with a secure income during your retirement.
Complete peace of mind with expert pension advice
If you have already started saving for your retirement it is important to review the benefits of your scheme and the status of your personal plan.
As part of the planning process we will be happy to review all your existing arrangements to see how they are performing. Our advisers will then help you understand the options open to you, to achieve your retirement goals.
The type of pension that is appropriate for you will depend upon your individual circumstances and we will help you select the one that is most suitable for you.
Additionally, if you have multiple existing pensions, perhaps from previous employments, we could advise on if pension consolidation could benefit you.
Flexible drawdown pension
A flexible Pension Drawdown lets you access 25% cash tax-free from your pension pot and leave the rest invested, providing the flexibility to choose how and when you withdraw the rest of the money.
Leaving your money invested could give it more opportunity to grow, however, like any investment, it could go up or down in value.
If you’re planning on keeping some of your pension invested during retirement, a flexible pension drawdown could be a good option for you to choose how much or how little you want to withdraw each month depending on your needs throughout the year.
It also provides the ability to diversify your investment portfolio for greater financial stability if desired with the remaining sum invested.
Purchasing an annuity
Retirement in the conventional sense may not be your desired option. However, having a solid financial foundation will provide relief if you ever change your mind or are forced to retire due to injury or illness.
The Annuity will then provide you with an income throughout your retirement. You can also choose to provide an income for life for a dependent or other beneficiary after you die. This purchase is a ‘one off’ transaction and it is therefore crucial to buy the right one.
The Annuity rate you receive, which determines the level of regular income received, will depend on a number of factors such as age, health and whether you smoke. More people are choosing to buy an annuity or look at alternative arrangements such as Drawdown pensions.
These plans allow you to take up to 25% of your pension pot as a tax free lump sum. You then move the rest into one or more funds and you are able to take income payments should you wish to do so.
The flexibility and tax-efficiency of Pensions
Eligibility for the State Pension
You may be eligible for a UK state pension if you’ve paid 30 qualifying years of National Insurance (or 35 if you started contributing after April 2016). While that’s great, you might hope to build a retirement income that leaves you more financial freedom.
Saving for retirement through a pension is typically the most tax-efficient approach, but with numerous options available, not all of them will be suitable for your circumstances. It requires investing time to determine which option is appropriate for you.
Self-invested schemes and company administered pensions
One of those options could be a SIPP, which is a self-invested personal pension. This type of scheme is popular among those comfortable making investment decisions with a good understanding of the risks involved.
Then there’s a SSAS. It’s a type of UK pension set up and administered by a company, with members usually comprising company directors and key employees. Members choose how to invest their money and can benefit from tax relief on those contributions.
One of the main benefits of an SSAS pension is the flexibility it offers with retirement options. Members can take a tax-free lump sum when they retire or use their pension fund to purchase an annuity or drawdown plan.
Pensions for employed workers and the self-employed
If you’re employed, you might have opted for a workplace pension which includes the benefit of your employer’s contribution.
However, as a self-employed individual, you can still experience pension growth. There are various financial benefits associated with retirement planning depending on the scheme you choose to contribute to.
For example, you might be eligible for tax relief on your pension, whether it’s private or personal, freeing up additional money to put into your pension fund.
The range of Pensions available in the UK
- Personal Pensions
- Workplace Pensions
- Final Salary Pensions
- Defined Benefit Pensions
- Defined Contribution Pensions
- Government pensions
- NHS Pensions
- Forces Pensions
- SIPP
- SSAS
A PENSION IS A LONG TERM INVESTMENT, THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND UPON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES AND TAX LEGISLATION.
EXPERT PENSION ADVICE
With the widening range of choices it’s important to understand what your options are, and the risks involved, in order to ensure you make the right choice with your retirement savings.
Call 02380 420 606 for a quick chat or contact us and we can arrange a no-obligation consultation.