Most of us now recognise the need for planning ahead to save for when we retire. There is an increasing emphasis on the need for individuals to pay into private pensions so we don’t need to rely on government handouts in old age.
With ever changing rules surrounding pensions from the introduction of stakeholder pensions to pensions simplification, the number of retirement planning choices increases. Are you better off in a money purchase or final salary scheme, in an occupational scheme or a personal pension and which pensions funds offer your preferred level of risk and desired growth potential? This is where Ferguson Oliver can help.
As you approach retirement, you will need an IFA to tell you which is the most appropriate way to draw your pension. Is it through a traditional annuity, phased retirement, income draw down or a combination? Only an IFA can advise on every aspect of pension and retirement financial planning.
PENSIONS are among the most tax-efficient and effective ways to save for retirement, but working out how much to save and deciding which type of pension is best often feels like a complicated business.
The good news is from 6th April 2006, so-called “A-Day”, life got simpler for retirement savers as the government brought in a new simplified set of rules, effectively shelving the eight previous tax frameworks for pensions, which made life very complicated for everyone.
The changeover means it ought to be easier than ever to begin calculating how much you ought to be saving for your future.
The new rules have given savers far greater freedom in how and when pension benefits are taken.
Pensions have long offered attractive tax breaks. This means for higher rate taxpayers a contribution of £100 only costs £60, for basic rate taxpayers the same contribution costs £78, as the Government providing the £40 and £22 respectively in tax relief.
Certain elements of pension simplification create even more generous tax breaks for some savers. For example, those paying into any pension arrangements which under the old rules did not allow the plan holder to take any tax-free cash from the fund when they come to take benefits from the pension, now find that they can now take 25 per cent of the value of the fund as a tax-free lump sum.
Simplification ought to have taken some of the mystery out of pensions, but with the new flexibility has come new dilemmas for would-be savers, as well as those already building up their retirement nest eggs.
For this reason, many would do well to discuss with an independent financial adviser what steps they might need to as a consequence of the changes made on the 6th April 2006, and also how their pension needs might be met because of the rule changes.
We will be able to help you decide what action to take. Questions we may ask include:
- How much should I save into my pension
- How much can I save without incurring a tax penalty
- What are extra options under the new rules and are they appropriate to me
- What are my options when I come to take benefits from my pension
- Now the tax treatment for all types of pensions is similar, how can I tell which are best suited to my needs
- Is there any action I ought to consider because of the rule changes to safeguard my benefits and make the most of tax breaks under the old regulation
We offer the first consultation free of charge, giving you an opportunity to find out more about our expertise and how we will be able to help you. Contact us today for your free no-obligation consultation.