Pensions

Pension Strategy & Services

Pensions remain one of the most tax-efficient ways of investing for retirement. But how much and for how long should you invest? More importantly, what level of income will you need in retirement? For most of us, the state pension will not provide adequate funding in retirement to maintain the lifestyles we become accustomed to during our working lives. Making private pension arrangements ensures a comfortable and enjoyable retirement and gives you peace of mind that you will not outlive your funds. As well as pension pots, many clients will build up additional cash savings and investment portfolios to complement their retirement income.

In order to plan for your future, talk to us about investing in pensions options such as a personal pension and a self-invested personal pension (SIPP). We can also review any existing pensions you might have, as well as other assets, and advise on strategies to help you reach your retirement goals.

Our expertise is available to help you navigate the complex pensions environment. We will take the time to regularly review what retirement looks like for you and make recommendations where necessary to give you confidence that your arrangements have capacity to fulfil your individual needs.

Pensions – Tax Advantages

Tax relief - If you’re a basic rate taxpayer, your pension provider will claim back Income Tax at the basic 20 per cent rate on your behalf on the contributions you make and add it to your pension pot. Higher rate taxpayers claim the additional rebate through their tax returns.

Tax-free cash - Most schemes allow you to withdraw 25% of your fund tax-free from age 55 onwards. Subsequent withdrawals are subject to income tax.

Taking your pension - Although most personal pension schemes specify an age when you can start withdrawing benefits from your personal pension (usually between 60 and 65) you are allowed to do that from age 55 if you wish. You don’t have to stop work to draw benefits from your plan.

Death Benefits - If you die before the age of 75 and haven’t purchased an annuity, your beneficiaries can inherit the entire pension fund as a lump sum or draw an income from it completely free of tax. If you’re over 75 years of age when you die, there will be tax to pay on any withdrawals made by the recipient of your fund.

Personal Pension Plans

A personal pension plan helps you save money for retirement and is available to any United Kingdom resident who is between the ages of 16 and 75 (Children under 16 cannot start a plan in their own right but a Legal Guardian can start one on their behalf). 

You can start a personal pension even if you have a workplace pension or if you’re self-employed and don’t have a workplace pension. You don’t have to be working to take out a Personal Pension Plan and you can also provide a Personal Pension Plan for your spouse/partner or your child/children.

When you contribute to a Personal Pension plan, your money is invested to build up a fund/pension pot over a number of years.

SIPP (Self-Invested Personal Pension) 

A SIPP is a government approved pension scheme, designed to help you save for retirement. A SIPP allows tax relief when you invest your personal pension, whilst giving you greater control over investment decisions.

Typically pensions can only be invested in a limited number of funds, however you can invest a SIPP in funds of your own choosing. This type of pension offers up to 45% tax relief on contributions, and you are also exempt from capital gains or income tax.

From the age of 55, you can start to access your SIPP either as a drawdown or as a lump sum. You can discuss this with your investment manager who will be able to guide you as to the most suitable option to make your SIPP last throughout your retirement.

Planning For Retirement

When you reach retirement, there are a number of ways you can use your pension fund, and other assets, to provide you with an ongoing income. The decision you make is extremely important and can have lasting implications for you and your family, so good financial advice is essential.

Current pension rules mean that many personal schemes are deemed to be outside of your estate for the purposes of inheritance tax. As a result, it is now more important than ever to have an effective strategy in place to draw down the income that you need in retirement from the most tax-efficient source.

If you are approaching retirement, we will work with you to identify and analyse your income requirements and various sources of income. We will put together an investment and income strategy that allows income to be drawn in the most tax-efficient way, taking account of your income, capital gains and inheritance-tax positions.

For most people, retirement is a largely unknown quantity. We will help give you peace of mind by building a fluid plan that we will review together and adjust as the years pass, allowing you to enjoy a happy and stress free retirement.
The value of pensions and investments and the income they produce can fall as well as rise, you may get back less than you invested.

Tax treatment varies according to individual circumstance and is subject to change.
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