We will review the best and most tax-efficient methods for your retirement plans and can discuss with you the range of benefits available when you come to retire.
Since April 2015 members are able to access their pension with a lot more choice. However pension scammers are continually looking for ways to target individuals and their pension savings. Read about pension scams.
The most popular options for saving for your retirement currently include:
Personal pension or Stakeholder pension
Personal pensions work on a money purchase basis, in other words the money you save each month or through a lump sum is invested and used at retirement to provide you with benefits.
Self Invested Personal Pension (SIPP)
These are a form of personal pensions which give you much greater investment freedom over your pension funds, along with more flexible options on how to take benefits at retirement.
Small Self Administered Scheme (SSAS)
This is an occupational pension scheme for small companies – please refer to Business Protection for more information.
We will discuss these options with you to ensure you have the most appropriate pension vehicle to suit your individual needs. Contributions you make will usually benefit from tax relief and the funds will grow in a tax free environment. When you are ready to retire – for most people from age 55 at the earliest – the fund is used to provide you with pension benefits.
You should not rely on State Benefits alone providing you with the lifestyle you require during your retirement years.
Lifetime Allowance (LTA)
When your benefits come into payment they will be tested against a ceiling known as the Lifetime allowance (LTA). Various changes to the LTA have resulted in protection being introduced to prevent indivduals with previously accumulated pension savings under existing regimes being disadvantaged should their funds exceed changes in the LTA.
From 6 April 2016 the LTA for pension contributions reduced to £1 million.
With this LTA reduction, HMRC introduced two new pension protections: Fixed Protection 2016 (FP16) and Individual Protection 2016 (IP16).
With FP16 you must have no further benefit accrual after 6 April 2016 and with IP16 you must have retirement savings of at least £1 million as at 5 April 2016. The application process is via a self-service HMRC online portal which for IP16 expires on 5 April 2017.
Options when you come to take benefits
If you have 12 months or less before you retire, we would recommend that you carefully consider your options. Your pension fund will be used to provide you with an income for your retirement years and may also include a tax free cash lump sum.
For clients that don’t require responsibility for investment risk of their funds an annuity provides a set level of income which can remain level or increase, or with additional spouse benefits. Once purchased the terms cannot be altered so it is vital that you make the right choices at outset. It is no longer a requirement to purchase an annuity from an insurance company.
Drawdown including Flexi-access drawdown
This allows you to choose the income your want in retirement with no maximum limit, subject to certain qualifying criteria. You now have the choice to take your funds as an income for life or to 'flexibly access' as much as you want when you want. The amount of tax you will pay will depend on how you draw your pension funds and on your own personal circumstances.
We will use our extensive knowledge of retirement planning – both pre- and post- retirement, to help you meet your future aspirations.