Are you ready for retirement?

Worried about retirement income? Contact us today to plan for your tomorrow

What is a pension?

A pension is a long-term investment/savings plan (ten years or more) that aims to build a fund for your retirement. This can be used to provide you with an income when the pay packets stop – your pension.

Have you old pensions from previous employers? Are the charges excessive? This is where reviews can help.

When was the last time you reviewed your pension?

It is so important to review your plans, most things have to be serviced/reviewed. You get your car serviced every year….why? to make sure it doesn’t break down. You cut the grass every week…why? – so it doesn’t get out of control.

So you should review your pension every year…why? To make sure that it does what it set out to do. Make sure market conditions haven’t adversely affected your plan.

Also beware if you are transferring your pension to another provider. What is the investment? Is it alternatives such as overseas property, storage units or car park spaces? These investments may not be suitable for you. Check it out thoroughly and check the credentials of your advisor.

How a pension works

  • The money you save in a retirement plan is invested depending on your attitude to risk.
  • Your contributions will receive tax relief at the basic rate of income tax. What does that mean? Well if you want to save £80 per month, the government will top that up by adding 20% tax relief so the total monthly invested will be £100. If you are a high rate tax payer, so you are in the 40% tax bracket you will claim an additional 20% tax relief through your self assessment tax return.
  • The value of your retirement plan will depend on a number of factors: including when you start saving, how long you save for, how much you save and where your money is invested.
  • The value of a retirement plan isn’t guaranteed and its value can go down which may affect the retirement income you can buy in the future.
  • When you retire or reach a certain age (normally from age 55 at the earliest), the pot of money you’ve saved is used to provide you with a taxable income in retirement.
  • How much income you’ll get will depend on a number of factors; including the value of your plan, when you decide to take your pension and how you choose to provide your income in retirement.
  • You can also choose to take a tax-free cash payment currently up to 25% of your pension plan. This would reduce the value of your retirement fund and therefore the income you can buy in retirement.

Pensions are a very tax efficient way of investing for retirement. And you can also invest in direct shares and commercial property within a pension although this would only be suitable for high net worth individuals. Pension legislation changes quite often so these facts will be subject to change in the future. Please contact us if you have questions surrounding the subject of pensions.

Pre-retirement checklist

Your life can change a lot when you retire, so it’s well worth making sure you have a healthy overview and understanding of your financial situation.

Getting a clear idea early on will mean you can adjust or tweak your route to retirement without it having a big impact on your day-to-day life now.

Download the pre-retirement checklist to get started.

Protect your Pension Pot

Are you considering transferring money from your pension fund into a new scheme?