Retirement Planning

It is never too early to start thinking about how you will fund your retirement.
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Retirement Planning

A key part of planning for your retirement is knowing what you want to get from your pension pot to allow you to live the type of retirement that you want.

Whether you need to set up a review of your existing retirement plans, you need to put in place a strategy to help you achieve your retirement goals, or you want guidance on what you should be aware of, we can help.

Although many people think of a pension is what they receive when they retire, in actuality your pension is a pot of funds that can be used in many ways, to provide you with a form of income during later life. We can offer you guidance on the types of products available to you and how these will work to suit your situation.

Unlike a workplace pension scheme, where the provider of the pension makes the decisions on how the investment is managed, a self-invested personal pension plan (SIPP) is a pension scheme approved by HM Revenue and Customs (HMRC) where you can make your own investment decisions. The rules for contributions and benefit withdrawals are the same in these schemes as with a personal pension scheme and you can choose from a full range of investments that are HMRC approved. But in this scheme the HMRC rules allow for a greater range of investments than a personal pension scheme, which includes equities and property.

Trustee schemes are where your pension is managed by a person or company who acts separately and independently from your employer. The trustee holds the assets for the pension scheme and makes sure they are properly managed and that the benefits of the pension scheme are secure.

A personal pension plan is where you make a defined contribution, you choose the provider and you make arrangements for those contributions to be paid. If you haven’t got a pension through your workplace, or are self-employed, getting a personal pension could be a good way of saving for your retirement.

A drawdown is a way of you re-investing your pension pot into funds specifically designed to pay you a regular income during your retirement. The funds invested in are specifically designed and managed for this purpose, however the income you will get will vary depending on the performance of those funds. The income is also not guaranteed for life.

An annuity is a retirement income product that you can buy with some, or all, of your pension funds. They provide a guaranteed regular income during your retirement and are an alternative to a Drawdown Plan. You can convert your pension into an annuity if you wish.

If you were born before 6 April 1951 if you’re a man, or 6 April 1953 if you’re a woman, then you may be entitled to the basic State Pension. If you were born after this then you may be entitled to the new State Pension.

The Basic State Pension

The earliest you can claim the basic State Pension is when you reach State Pension age. To get the full basic State Pension you need a total of 30 qualifying years of National Insurance contributions or credits. This means you were either:

If you have fewer than 30 qualifying years, your basic State Pension will be less than £129.20 per week but you might be able to top up by paying voluntary National Insurance contributions.

* The basic State Pension increases every year by whichever is the highest of the following:

  • earnings – the average percentage growth in wages (in Great Britain)
  • prices – the percentage growth in prices in the UK as measured by the Consumer Prices Index (CPI)
  • 2.5%

The new State Pension

If you were born after 6 April 1951 if you’re a man, or 6 April 1953 if you’re a woman, then you may be entitled to the new State Pension. The earliest you can get the new State Pension is when you reach State Pension age.

In order to claim the new State Pension you usually need to have contributed to National Insurance for at least 10 qualifying years. These do not need to be consecutive years, so this means that for 10 years at least one or more of the following applied to you:

If you’ve lived or worked abroad you might still be able to claim some of the new State Pension.

You might also qualify if you’ve paid married women’s or widow’s reduced rate contributions.

Equity Release

Equity Release is another option that can provide extra cash in retirement to live on. It is also a way you could enable gifts to be made to children to help them on property ladder, or enable home improvements to be made.

But Equity Release this requires careful assessment of the risks and so specialist and impartial advice is essential. Read more about Equity Release here.

* Figures are quoted from https://www.gov.uk/state-pension

The value of an investment will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The level and bases of taxation and reliefs from taxation can change at any time. The value of any tax reliefs depend on individual circumstances.