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. Following ‘Pension Freedoms’ 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. 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.
A number of changes have been introduced that aim to simplify Pensions including ‘Pension Freedoms’. 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’?
With a Personal Pension you have the choice of where your money is invested.
New Personal Pensions have recently become less expensive and are now often cheaper than even Stakeholder Plans. Also Personal Pensions now have a much larger fund choice which allows a diversified portfolio of funds to be set up, therefore, allowing your Pension to be invested to suit your ‘Attitude to Risk’. 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.
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 a Flexi-Access Drawdown often known as Pension Drawdown.
Following ‘Pension Freedoms’ Flexi-Access Drawdown / Pension Drawdown is now an option that is often used as 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.
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 Conduct 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.
Please contact us for all your ’Pension & Drawdown Advice’.