Planning for retirement
When it comes to providing for retirement, too many people are doing too little too late. It's never too early to start saving for retirement and putting away even a small sum early on can make a big difference to the lifestyle you will enjoy when you retire. It's not wise to rely on the State alone. Although the basic State Pension is a start, you now have to wait longer before you can claim it and when you do, it may not be enough to give you the standard of living you'll be used to by then.
Many people today are living much longer, healthier lives, so retirement can last 30 years or more. That's why it's important for people of all ages to consider planning ahead. If you still want to be able to afford holidays and enjoy the free time retirement brings, then you may need to make additional pension arrangements, either by setting up a personal pension, or by joining a company pension scheme. Modern pensions benefit from some very exceptional tax breaks and nowadays, you can even contribute to your pension when you don't work!
Good pension planning means ensuring you have the 'pension pot' you need at retirement. Nowadays there are a number of tax efficient ways of providing for a comfortable retirement. The area is complex and choosing the right pension vehicle requires a detailed understanding of your personal circumstances, tax position, employment status and more.
In order to assess your position and advise you correctly, we provide a free initial face to face meeting, where you will need to provide financial details together with any existing pension contracts you have or had in the past. We will conduct an audit of your present arrangements; assess the level of pension that your present arrangements might expect to provide at retirement and then, if there is a gap between what you want and what you might get, advise you as to how best to invest to provide the extra retirement income you need.
One of the great attractions of pension schemes as a method of saving for retirement is that there is tax relief on contributions up to government set contribution limits. This means that to invest £100 into your pension it will only cost you £80 after tax (2014/15 tax year) or less if you're a higher rate tax payer. There is no other investment you can make, which will give you up to 45% tax relief (depending on the highest rate of tax you pay).
Pension legislation has changed over recent years and is subject to further change in the future. We can provide detailed advice following a thorough financial review, enabling you to plan ahead for your future retirement with confidence. Remember the good news is that the earlier you start saving, the longer your money will have the potential to grow!
What is auto enrolment?
Auto enrolment legislation has been designed to encourage a retirement savings culture in the UK. This new legislation requires all employers to automatically enrol some or all members of their workforce (depending on age and salary level) into a pension scheme that meets certain minimum standards. Depending on the worker’s age and salary level, employers may be required to make contributions to this pension scheme, adding to the contributions made by their workers. Auto enrolment will be phased in over 5 ½ years with the largest employers leading the way, with the first staging date on 1st October 2012, followed by medium-sized employers and lastly small and micro employers. The size of an employer’s largest PAYE scheme will determine at what point the new duties affect their organisation. The Pensions Regulator will write out to employers 18 months before their auto enrolment staging date.
If you are thinking of retiring in the next six months or so, you should contact us to receive independent financial advice and ensure you make the best choice for your retirement income. As Independent Financial Advisers we are experts in at-retirement planning, offering straightforward, unbiased advice to help maximise your income. The options available are much greater and you do not have to simply accept whatever your pension provider offers. Most pension plans now include an 'open market option' which means you are able to take advantage of the best annuity rate or pension. We can help you achieve a potentially higher income in retirement by searching the market and comparing who will pay the best income available from all of the leading providers. In short, we will assess your circumstances in detail to ensure you choose the correct options and investigate whether you qualify for even more income due to your health or lifestyle.
If you intend to ease yourself into retirement gradually, then you might want to consider phasing your retirement. On a regular basis, usually annually, you can use part of your pension pot to provide a taxable income or take a tax-free cash lump sum and reduced income. Your income can be provided either by buying an annuity or by income drawdown.
Phased retirement: also known as ('staggered vesting'), allows the purchase of a pension to be phased, thereby allowing flexibility when considering retirement. Phased Retirement plans are relatively complex and are not suitable for everyone, but for some individuals they can offer a flexible approach to retirement. Careful consideration must be given to an individual’s personal circumstances, including the value of their existing pension(s). We strongly recommend independent advice be sought from ourselves, if you are considering this option, so you can make fully informed decisions.
Our experience provides clients with an efficient service, taking care of all the paperwork and removing the burden of you having to familiarise yourself with this ever increasing complex subject matter, as well as the daunting completion of various forms and applications.
The value of investments can fall as well as rise and you may not get back the amount you originally invested.