Pensions
Rather than just asking our clients the question "How much would you need to retire on and at what age", we prefer to ask our clients how they see their own retirement. It does lead to some colourful answers!!! However, we believe it is an important step in the planning process to visualise their own retirement.
Since April 2006, pension legislation has seen some radical changes, the bulk of which, we believe are extremely positive and give people a real incentive to save for their futures. Pensions have come a long way from the dark days of commission riddled savings plans, which were the subject of many mis-sold cases in the 80's and 90's. Pensions today, are low charge, flexible and offer superb fund management as well as being tax efficient for a client.
As part of our planning process, we would seek to use all of the available tax relief we can when formulating our clients retirement plans. This, coupled with the option of self-investing and independent fund selection, puts our clients on the right road to achieve their goals.
Pre Retirement
When you have a clear goal in mind of how your retirement should look and the income you will need, we will need to take your entire financial position into consideration and work out the most efficient way of saving to meet your objectives.
Tax Efficiency
Pension funds grow virtually tax-free and as from the 6th April 2011 tax relief is so generous it can allow some clients to obtain tax relief of up to 50% of their income. In practice, this means that a £10,000 contribution into your own pension could cost £5,000.
In addition to the relief on personal contributions, other tax planning opportunities exist. For example, employees and employers can save on National Insurance, if salary sacrifice is exchanged for pension contributions. It is also possible to carry forward contributions for up to 3 years and still gain tax relief at your highest rate if your income allows.
Other Retirement Solutions
When people think of pensions, they tend to think of traditional defined benefit schemes, private pension arrangements and state pension, however, income in retirement can obviously take many forms. Your income could also include rental payments, dividends from shares, unit trusts or ISA deposits, income from insurance bonds or even trusts. As part of the financial planning process, it is our job to blend the savings vehicles which would yield the most efficient income in retirement.
Regular Reviews
Every financial plan will need to be reviewed at some stage, but pension planning needs constant attention in order to keep your goals on track. salary increases, inflation, investment returns and career changes are all events which require us to re-evaluate your pension plans and in the absence of any of major changes to these, we would also recommend a review every three years as a minimum.
Post Retirement
When people think pensions they tend to think of final salary schemes, private pension arrangements and state pensions, however, income in retirement can obviously take many forms.
Your income could also include rental payments payments, dividends from shares, unit trusts or ISA deposits, income from insurance bonds or even trusts. As part of the financial planning process, it is also our job to blend income streams to minimise tax and maximise returns.
Unfortunately, due to the lack of trust that some customers have in the financial services community, they may simply go on line and buy an annuity with the pot of money they have spent their entire lives building up and often regret not having taken advise, not realising that there are other options available to them.
Pension Income Options
Potentially, and especially if you are retiring early, you might have to live with your decisions for 40 years or more. The importance of a proper discovery session with your adviser cannot be overstated.
You will only ever receive advice from an adviser with the relevant qualifications.
Ongoing Advice
Depending on what decisions you may make regarding your pension income options, you may want ongoing advice from us to manage your income in the most efficient way. As our client, you will be able to login and look at the value of your plans at anytime and monitor performance against your goals.
Income drawdown pension plans are sophisticated products and subject to the fluctuation of the underlying assets, therefore, we always advise clients to review these plans on a regular basis in addition to the underlying investment strategies.
