Throughout your working life, no matter what age you are one of the most important investment decisions you will make is organising your retirement provisions. If you do not carry out any retirement planning, you will be reliant on the minimal pension benefits provided by the state in the form of Basic State Pension, State Second Pension (S2P) and Pension Credit. To determine the likely state pension benefit you will receive, you will need to obtain a projection by completing a BR19 Form and return it to The Pension Service. I am based in Solihull and provide independent pension advice and retirement planning advice by recommending pensions and investments to suit a wide range of clients' needs and objectives in the Solihull, Birmingham, Monkspath, Dickens Heath, Knowle, Dorridge, West Midlands and Warwickshire area.
Many people seek to enhance their retirement income by contributing to an employers' pension scheme and/or their own personal pension. You benefit from tax relief on your personal contributions, as well as the potential for long-term stock market growth. With occupational pensions, you have the added benefit of employer's pension contributions being added to your own funds.
It is important to understand that pensions are essentially tax deferred investment vehicles as opposed to ISAs (Individual Savings Accounts) which are free of personal tax. When taking your retirement benefits from an occupational pension or personal pension, you will be provided with a tax free lump sum along with a regular benefit (often with an annuity) which is taxable as earned income.
Choosing the right pension is not always the most straightforward decision. To obtain the most suitable retirement planning advice, it makes sense to contact an independent financial adviser who is able to fully understand your retirement needs and objectives. Whether you have existing provisions (occupational pension and/or personal pension), approaching retirement and looking to purchase an annuity, or are planning for your future retirement, I provide unbiased and independent pension advice for Personal Pensions, Pension transfers, Annuities, Unsecured pensions (including Income Drawdown and Flexible Drawdown), and Self Invested Personal Pensions (SIPPs).
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Occupational Pensions
This type of pension scheme is one of the most vital, popular and beneficial ways of providing income in retirement. The majority of employees have access to a pension scheme which they can contribute to along with their employer. Unfortunately, approximately 80% of Final Salary schemes nationwide are under review and are due to close or be significantly amended in the next few years. It is therefore immensley important for you to be able to make an informed and crucial decision about your future standard of living in retirement.
Additional Voluntary Contributions (AVC's) are usually available to increase occupational provisions and attract tax relief on contributions made from each employee. The AVC provider is often chosen by the employer, with further information available from your employer's pension scheme administrator.
Personal Pensions
There are a variety of different options available including standard Personal Pensions, Stakeholder Pensions or a Self Invested Personal Pensions (SIPPs). These pension plans are suitable for self-employed people and anyone who wants to make additional pension contributions within a flexible environment. There is also no minimum age for contributing to a personal pension, with some people using these to make long term investments for their children or grandchildren. Under the Pension Simplification 2006 amendments, the government made various changes to allow pensions to be more flexible. These include increasing the maximum annual contribution to 100% of your annual income, introduction of a Lifetime Allowance (£1.8 million for the 2011/2012 tax year) and protected rights are being brought in line with non-protected rights. Pension legislation is constantly changing and it is important that ongoing monitoring is provided by an independent pension adviser to ensure that you benefit from the most suitable advice, which can help to maximise your pension fund at retirement.
Pension Annuities
A pension annuity pays a guaranteed income for the rest of the life of the policyholder. There are various options available including level or increasing income payments, guaranteed income periods and benefits for the policyholder's spouse. Payments arranged to increase on an annual basis help to protect against the risk of inflation. Annuities also provide peace of mind with guaranteed payments for life and have no associated investment risk. Obtaining independent annuity advice is very important because once pension funds are vested and an annuity is purchased, this decision is final. Annuity rates are currently very low and may not be as competitive as annuity rates in the future if retirement is delayed.
The introduction of the Open Market Option (OMO) has also provided pensioners with the option of obtaining the most competitive annuity rates when they decide to take their retirement benefits. Annuity advice from an independent pension adviser can be vital to secure the highest annuity income. Depending on your health you may be able to increase your annuity by obtaining an enhanced annuity or impaired life annuity. Various companies also offer short term annuities that can provide a guaranteed income without locking into an annuity for life. As an independent pension adviser I will be able to help provide unbiased advice on the most suitable annuity for you.
