Pension Freedom Pension Freedom - What it means to you!
The March 2014 budget delivered the biggest shake up to retirement planning for decades. It has changed people's perceptions of pension savings and it will change the advice they will need in the run up to retirement and beyond. Use our Pension Review Service to answer all the questions you have regarding your pension planning.
Following the recent changes in pensions law clients will need to think differently about their retirement saving.
1. Pensions are now easy access tax friendly savings! Easy access from age 55 makes pension pots feel a lot more like other savings. Pension funds will no longer be locked away out of reach. And there will be no need to buy an annuity to provide your retirement income. New 'Drawdown' options are available and whilst not suitable for everyone, give greater choice as to how you can make your pension fund work for you.
2. Pensions are still the most tax privileged savings! Pensions still offer the best tax breaks of all mainstream savings . Where else can you get tax relief on contributions, tax privileged investment returns and tax-efficient benefit options from the age of 55?
3. How much do you need to save for retirement? We have sophisticated software programmes which will show you the optimum level of contribution based on your income requirement when you stop working. Our reports will show you different ways of achieving your retirement needs.
4. Keeping track of retirement goals Our research shows that most people don't really know the value of their pension until they're older and in the run up to retirement, despite the fact that they're likely to be receiving annual pension statements. Our Pension Review Service monitors your progress towards retirement income. It also will analyse any existing pension plans you have to check if they are 'on-track' to provide your desired retirement income.
5. Don't rely on the state The flat rate state pension needs to be factored in to financial plans. It's worth remembering that the proposed £144 a week (in 2012/13 terms) is only equal to around 2/3rds of the minimum wage, so it's certainly no substitute for private pension provision. Our review service takes account of estimated State Pension and identifies this.
6. Understanding just how long retirement could last Life after work costs a lot more than most people think. According to the Institute of Fiscal Studies, 58.5% of workers haven't given any thought to how long their retirement could last. A 65 year old can now typically expect to live for another 20 years, and in all likelihood may well live a lot longer. That means the number of ‘retired years' is inching closer to the years spent working. Individuals need to think of their pension savings as deferred pay.
7. Making pension funds last Our clients will need support on using retirement savings to provide a sustainable income throughout their lives. This makes specialist advice essential to good 'at retirement' planning!
Tax planning goes hand in hand with our investment advice. Limiting how much tax is paid can really help our client's funds go further. Making full use of the array of tax allowances available is essential and requires advice.
8. Just because you can doesn't mean you should! From April 2015, some pensions became very much like bank accounts for the over 55s with easy access. The new freedom brings temptation and a lot of new responsibility. There's a danger that some pension savers will draw their pension savings at the first opportunity. This could see them hit with a large income tax bill.
Our advice will identify whether it is sensible for you to make major withdrawals from you pension funds.
Contact us on 0113 2300449