Planning for retirement
Pensions are often seen a complex area of financial planning, however at their core they are simply a super long term savings account which allow you to save money while you are working, to then spend money in the future when you decide to stop working.
Tax efficiency while saving.
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Personal pension contributions attract Income Tax relief at your marginal rate of Income Tax, ranging from 20% to 45% - this kick starts your savings and helps reduce your tax liability. Payments can be made up to the Annual Allowance, which is currently £60,000 or 100% of your salary, whichever the lower.
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Employer pension contributions from a company are a business expense, and therefore reduce profits and Corporation Tax. This can be a tax-efficient way of extracting money from a company.
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Once funds are within a pension wrapper, there is no Capital Gains Tax or Income Tax payable on any gains or dividends received from the investments within the pension.
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Pensions are usually outside of the Estate for Inheritance Tax purposes which means they are not usually subject to tax upon death.
Flexibility when spending.
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Either 25% of the pot size, or £268,275, whichever the smaller, can be taken out of the pot tax-free. This amount can be taken as a lump sum, or via a regular payment, or a mix of both.
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You can exchange the capital value of your pension to buy an Annuity from a provider which will provide you a guaranteed income for life. You can also opt to include a provision for your spouse or partner, have the income increase with inflation or include a guarantee period. When you, and your spouse if they are included, die the payments will stop.
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You can leave the capital value of your pension invested, and drawdown on the fund as and when you want - either ad-hoc payments, regular income or a mixture of both. As the pension remains invested, there is no guarantees any income will last yuor lifetime, however any unspent pension can fall to any beneficiary you wish as a lump sum.
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Annuities and Flexible Access Drawdown are the main options in drawing a retirement income, but they can be combined together to suit your needs and provide security, and flexibility, over time.
Using cashflow forecasts to bring the future into the present, helping you build the retirement you want.
How we can help
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An in-depth review of all your current pension arrangements showing you what you have, how much it is worth and what it is projected to give you in retirement. The review also covers the charges associated with the plans, the performance and any specific terms that are valuable.
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If appropriate, we are able to assist in recommending and implementing the consolidation of multiple pension plans into a single pot. Often the basis for this is lower charges, better performance as well as simplification.
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We can produce cashflow forecasts based upon agreed assumptions, as well as different scenarios and various stress tests to analyse your plans to a deeper degree.
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Whether personal pension contributions or from a company, we can advise, implement and monitor pension contributions and assist with information required for tax returns.
