Please also see our Dedicated Pension Website:
Click this link for our PENSIONS Website
Whatever your age, professional advice can make a big difference to the quality of life you enjoy when you retire. Retirement planning is a complex area, and we can help you to choose the right plan to suit your personal circumstances. We can also guide you through the various options you have on retirement. The earlier you start putting money aside to provide for a comfortable retirement, the better. But even later in life, there are still a number of options to choose from. When your pension matures, there’s the question of how to make the best use of the money that’s been accumulated, for example whether to opt for an Annuity from your existing provider, or take an Open Market Option or go into Pension Drawdown.
Do I need to save for retirement?
Your retirement will hopefully last for 20 or 30 years or more. You will need a substantial income to support yourself over such a long period and the basic state pension is not enough to provide the standard of living most people want. To provide a good standard of living, you will need another source of retirement income as well.
Putting money aside for retirement is one of the biggest commitments most people make. It’s important not to make a rushed decision. You need to think carefully about what type of pension or investment plan will work best for you.
The information in this section gives an introduction to pensions and some of the things you will need to consider about the benefits of saving through a pension.
From April 2006, a number of changes have been introduced that aim to simplify Occupational and Private Pensions. However, there are still a number of questions you need to ask yourself, for example:
· How much should I contribute?
· What type of scheme should I contribute to?
· Where should I invest my money and what funds should I use?
· How much will I recieve from my ‘State Pension’?
It’s important to think about how best to build up your retirement fund. You’re never too young to start a pension – the longer you leave it the more you’ll have to pay each month to build up a decent fund.
Personal Pensions
Unlike an Occupational Pension Scheme (OPS), with a Personal Pension you have the choice of where your money is invested.
Since April 2001, Personal Pensions that meet certain conditions have been able to qualify as Stakeholder Pensions. The conditions include low charges, flexible contributions and no extra charges if you transfer to another scheme. If you are newly starting a Pension scheme, it makes sense to consider a Stakeholder Pension.
However, new Personal Pensions have recently become less expensive and are now often cheaper than Stakeholder Plans. Also Personal Pensions normally have a much larger fund choice which allows a diversified portfolio of funds to be set up, therefore, Personal Pensions can often be more suitable. Please ask us for advice.
Self Invested Personal Pension Schemes (SIPPs)
A Self Invested Personal Pension (SIPP) is a tax-efficient wrapper within which a wide range of investments can be held. A SIPP must be set up with a recognised provider and professional trustee.
SIPPs have the same tax benefits and regulations as conventional Personal Pension Plans but you and/or your Adviser have greater control over the investment choice – each SIPP is unique to the individual. Otherwise, it operates in the same way as a conventional Personal Pension in respect of contributions and eligibility, for Inland Revenue purposes.
The range of permitted investments is extensive and includes conventional investments such as deposits, unit trusts and stocks and shares and also more unusual assets such as commercial property or investments in forestry etc.
Occupational Pension Schemes (OPS)- Employers’ Pension Schemes
If your employer runs a Pension scheme, it’s often a good idea to join as your employer may contribute to the scheme on your behalf and generally you will get a package of benefits, which may include life cover.
Employer Pension Schemes can be of two types:
· Final Salary Scheme (also called ‘Defined Benefit’). With these, your benefits are calculated according to a formula based on your pay and the length of time you have been in the scheme. Your Benefits i.e. your Pension may be lower if you leave the scheme before your normal retirement date or the scheme closes before then.
· Money Purchase Scheme (also called ‘Defined Contribution’). These work like normal Personal Pension Plans. The amount of pension you receive at retirement depends on the amount paid into your scheme, together with how well your fund/s grow/s, the amount deducted in charges from your scheme and the rate at which you can exchange your pension fund for a Pension Annuity at retirement.
Converting your Pension funds into retirement income
There are several ways of turning your Pension fund into a regular income for your retirement. The government sets rules about how you can do this. The usual way is to take a tax-free lump sum and then use the rest of the fund to buy a Lifetime Annuity from a Life Insurance company. This turns your Pension fund into a pension income for the rest of your life.
After deciding whether to take any tax-free lump sum, if you have a wife, husband or civil partner who depend on you, you will need to consider whether you want to buy a joint-life Annuity.
Using an Open-Market Option (OMO) is exercising your right to shop around and buy your Annuity from the company offering the best deal for you.
But if you decide you don’t want to buy a Lifetime Annuity straight away; one option is an Unsecured Pension.
Unsecured Pension is often also known as Income Withdrawal. If you are under 75 year old, an Unsecured Pension / Income Withdrawal is an alternative to buying a Lifetime Annuity when you retire. It allows you to draw an income from your Pension fund while the fund remains invested.
If you have a salary-related (i.e. final Salary) Occupational Pension Scheme, you don’t have to buy an Annuity, as your Pension will be paid to you direct.
Pension Review Service
Our Pension Review Service could help you keep your retirement planning on track. We would take a comprehensive look at what provisions you currently have and consider how they fit with where you want to be.
We would also review how well your existing Pension funds have performed, and consider if these funds mirror your current ‘Attitude to Risk’.
It may be that your current funds have not performed up to the level that you had expected or that your existing provider charges are higher than other providers. This could be adversely affecting your potential benefits at retirement, we will review this for you – and then, if appropriate, suggest the best options for you.
The ‘Financial Services Authority’, who regulate Pensions advice, recommend that all existing Pensions are reviewed regularly (i.e. a minimum of bi-annually), to ensure they remain on track. Often any potential Pension shortfall identified can be reduced or cleared by saving charges on your current plan/s or investing in funds which perform better than those of your existing plan.
Once we have reviewed your plans, we would automatically update you on the progress of your contracts on an annual basis, therefore, saving you precious time in completing further reviews.