Pensions are a fundamental part of planning for retirement, but they can be complicated. We can help you understand all the implications and ensure you choose the best option for your needs.
New pension freedoms and flexibility around how you can access your pension savings once you reach minimum retirement age means pensions can now be a more attractive and tax-efficient element of your financial strategy.
Contributions to a pension scheme are eligible for tax relief, up to the Annual Allowance. For example, if you are a basic rate taxpayer the Government will add £2 in tax relief for every £8 you put into your pension.
The Annual Allowance for the 2018-19 tax year is £40,000 for most taxpayers. There is a lower allowance for those with adjusted incomes over £150,000 – and the allowance will also be reduced if you have started to take pension benefits from your fund.
There are various types of pension schemes available, including:
Personal Pension: a pension savings solution that provides you with a pension pot into which you – and your employer too, if desired – can contribute. Tax relief is usually added to your contributions and anyone can save in a personal pension (even if not earning). You can transfer your pension savings from one Personal Pension fund to another, but it’s important to get advice before doing so.
Defined Benefit Pension: a scheme which guarantees specific benefits on retirement, whatever the market conditions. Pension benefits are accrued according to your salary and length of service.
Stakeholder Pension: a form of personal pension facility available to anyone. Whilst there is a cap on charges for a stakeholder scheme, investment choices may be limited.
Workplace Pension: workplace schemes are now compulsory and every employer must have a scheme to which you can belong.
Self-Invested Personal Pension (SIPP): a more complex personal pension scheme for those with the knowledge and experience to be in control of the investments in their pension fund. SIPPs can allow a wider range of investment assets, including commercial property, direct shareholdings and discretionary-managed portfolios.