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SIPPS/SSAS | INVESTMENTS | PROTECTION | TAXATION | MORTGAGES | PERSONAL ACCOUNTS (NPSS/NEST) |
Pensions
Many of us may dream of retiring one day because of the free time that it will bring, but what if your pension pays at such a low rate that you can't to afford to enjoy it?
The basic state pension is £97.65 per week for tax year 2010/2011.
There are many different schemes available and the way that they operate varies, so it's worth getting informed advice before making a decision.
To get a basic insight, here is an overview of what's available. To get further information, please feel free to contact us.
Occupational pension schemes
Employers establish company pensions for their staff, and these can be final salary or defined contribution based. Money is either paid in by the company or the employees or both and then the money is then invested. Each scheme varies depending on the version that the employers choose to undertake.
A final salary scheme provides a guaranteed pension based upon your salary and service. Actuaries monitor the scheme to ascertain whether there will be sufficient funds to meet final pension payments. If the scheme underperforms, the company is then expected to make up the difference. If it does well, then there may be the option for both the company and employees to cease contributions and rely on the money gained from investment success. This type of scheme is considered to be the best available but unfortunately many of these schemes are now closing due to the huge costs of running them.
An alternative to this is a defined contribution or money purchase scheme, in which each employee has a separate fund based on their own individual contributions, combined with that of the company's. When this comes to fruition, a lump sum is released which can then be used to buy an annuity, which guarantees the policyholder an ongoing income throughout retirement. Alternatively 25% of the fund can be taken as a tax free lump sum and the balance used to purchase an annuity.
Personal pensions
If you are self-employed or like the freedom to change jobs and take a pension plan with you to your next job, then personal pensions may be the right choice.
As with defined contribution schemes, funds are invested and used to provide tax free cash and annuity purchase at any time from age 55 to age 77.
A key benefit of using pension schemes to save for retirement is the tax relief on contributions which is provided by the government. In this respect, depending on your salary level, pensions offer a unique opportunity to gain between 20 to 50 per cent tax relief.
Self-Invested Personal Pensions (SIPP)
For greater control and flexibility, a SIPP may prove to be an attractive option. Similar to a personal pension plan, there is greater opportunity to dictate how the money is invested and how it will be released in retirement.
Stakeholder Pensions
In 2001 the government introduced Stakeholder Pensions, and now there are many options within the low-cost pension category. This means that people within lower income brackets or unemployed are able to access the benefit that a pension scheme provides in retirement (more about Stakeholder Pensions)
When should I take out a pension?
The answer is as early as possible, as the more money you contribute, the more you will have to live on and invest in retirement.
To make your retirement a time to enjoy, please contact us to discus your options.
That's pretty much the prospect unless you make additional pension arrangements either by setting up a personal pension or by being part of a company scheme.
Many of us may dream of retiring one day because of the free time that it will bring, but what if your pension pays at such a low rate that you can't to afford to enjoy it?
The basic state pension is £97.65 per week for tax year 2010/2011.
There are many different schemes available and the way that they operate varies, so it's worth getting informed advice before making a decision.
To get a basic insight, here is an overview of what's available. To get further information, please feel free to contact us.
Occupational pension schemes
Employers establish company pensions for their staff, and these can be final salary or defined contribution based. Money is either paid in by the company or the employees or both and then the money is then invested. Each scheme varies depending on the version that the employers choose to undertake.
A final salary scheme provides a guaranteed pension based upon your salary and service. Actuaries monitor the scheme to ascertain whether there will be sufficient funds to meet final pension payments. If the scheme underperforms, the company is then expected to make up the difference. If it does well, then there may be the option for both the company and employees to cease contributions and rely on the money gained from investment success. This type of scheme is considered to be the best available but unfortunately many of these schemes are now closing due to the huge costs of running them.
An alternative to this is a defined contribution or money purchase scheme, in which each employee has a separate fund based on their own individual contributions, combined with that of the company's. When this comes to fruition, a lump sum is released which can then be used to buy an annuity, which guarantees the policyholder an ongoing income throughout retirement. Alternatively 25% of the fund can be taken as a tax free lump sum and the balance used to purchase an annuity.
Personal pensions
If you are self-employed or like the freedom to change jobs and take a pension plan with you to your next job, then personal pensions may be the right choice.
As with defined contribution schemes, funds are invested and used to provide tax free cash and annuity purchase at any time from age 55 to age 77.
A key benefit of using pension schemes to save for retirement is the tax relief on contributions which is provided by the government. In this respect, depending on your salary level, pensions offer a unique opportunity to gain between 20 to 50 per cent tax relief.
Self-Invested Personal Pensions (SIPP)
For greater control and flexibility, a SIPP may prove to be an attractive option. Similar to a personal pension plan, there is greater opportunity to dictate how the money is invested and how it will be released in retirement.
Stakeholder Pensions
In 2001 the government introduced Stakeholder Pensions, and now there are many options within the low-cost pension category. This means that people within lower income brackets or unemployed are able to access the benefit that a pension scheme provides in retirement (more about Stakeholder Pensions)
When should I take out a pension?
The answer is as early as possible, as the more money you contribute, the more you will have to live on and invest in retirement.
To make your retirement a time to enjoy, please contact us to discus your options.
That's pretty much the prospect unless you make additional pension arrangements either by setting up a personal pension or by being part of a company scheme.