headerimageSaving for your future…

It is no secret that the country’s finances are in a poor state and this is likely to continue for years to come.  The State pension is costing the Exchequer more and more, and with life expectancy increasing and a static birth rate, there will be more and more pensioners relying on a smaller and smaller workforce. There is therefore likely to be less and less State money to go around.

It is vital that we make additional provision to increase our income in retirement and the most effective way of doing this is through a private pension. To encourage us to save for retirement the Government offers some generous tax breaks on our pension contributions. Basic rate taxpayers receive tax relief at 20%, higher rate taxpayers receive 40% relief and additional rate taxpayers receive 45% relief (subject to limits). We do not get many gifts from the taxman, so it makes sense to take advantage of the most tax-efficient way of investing there is, especially with the new range of low-cost, flexible pension plans now available.

The sooner you start making pension contributions the better, even though retirement may seem a long time away. Those contributions you make in the early years can make an enormous difference to your life in what is, after all, the longest holiday you will ever have. There are a number of different pension plans available and we can advise you on which is most suitable for you, how much you should save into it and the types of investment fund you should consider.

Occupational pension: You may be lucky enough to have a pension scheme run by your employer into which your employer is making contributions out of his own pocket. If so, it almost always makes sense to join it as soon as possible. You will usually be required to make contributions from your salary as well.

Personal pension: If you are employed, whether or not you have an occupational pension at work, or if you are self-employed, a personal pension is a tax-efficient vehicle into which you can save money for retirement. You are free to save monthly and/or invest lump sums whenever you like. Most personal pensions have a wide range of investment funds which you can choose to invest into, although we would always recommend asking for independent financial advice on which funds are suitable for you as some funds are riskier than others.

Stakeholder pension: This is a personal pension which has restrictions on the levels of charges which can be made by the pension company but also has low minimum contributions levels. Currently, almost everybody, even a newly-born baby, can have a stakeholder pension whether they are earning or not, and will still get at least 20% tax relief.

Self-Invested Personal Pension (SIPP): If you are knowledgeable enough about investments to be want to run your own pension, a SIPP can be used to invest directly into shares and bonds as well as more unusual types of investments such as commercial property. However, the nature of a SIPP means that it is not suitable for all investors. The benefits of self-investment are often of use only to those investors with a high level of sophistication when it comes to investment decisions, or with larger pension funds as there may be additional charges for arranging and dealing within a SIPP which may erode the value of smaller pension pots.

It is very important that advice is sought before investing into a SIPP

Workplace Pension Schemes: By 1st February 2018, almost all businesses, even if they employ only one person, will have to set up a Workplace Pension Scheme for their workers into which both the business and the worker will pay. The exact date when this will apply to a business depends largely on the number of workers it employs, and all larger companies are already subject to this requirement. Now, businesses with fewer than 50 workers will be reaching their “staging date”, when they will also have to offer a Workplace Pension.

+ Occupational

Occupational pension: You may be lucky enough to have a pension scheme run by your employer into which your employer is making contributions out of his own pocket. If so, it almost always makes sense to join it as soon as possible. You will usually be required to make contributions from your salary as well.

+ Personal

Personal pension: If you are employed, whether or not you have an occupational pension at work, or if you are self-employed, a personal pension is a tax-efficient vehicle into which you can save money for retirement. You are free to save monthly and/or invest lump sums whenever you like. Most personal pensions have a wide range of investment funds which you can choose to invest into, although we would always recommend asking for independent financial advice on which funds are suitable for you as some funds are riskier than others.

+ Stakeholder

Stakeholder pension: This is a personal pension which has restrictions on the levels of charges which can be made by the pension company but also has low minimum contributions levels. Currently, almost everybody, even a newly-born baby, can have a stakeholder pension whether they are earning or not, and will still get at least 20% tax relief.

+ SIPP

Self-Invested Personal Pension (SIPP): If you are knowledgeable enough about investments to be want to run your own pension, a SIPP can be used to invest directly into shares and bonds as well as more unusual types of investments such as commercial property. However, the nature of a SIPP means that it is not suitable for all investors. The benefits of self-investment are often of use only to those investors with a high level of sophistication when it comes to investment decisions, or with larger pension funds as there may be additional charges for arranging and dealing within a SIPP which may erode the value of smaller pension pots.

It is very important that advice is sought before investing into a SIPP

+ Workplace

Workplace Pension Schemes: By 1st February 2018, almost all businesses, even if they employ only one person, will have to set up a Workplace Pension Scheme for their workers into which both the business and the worker will pay. The exact date when this will apply to a business depends largely on the number of workers it employs, and all larger companies are already subject to this requirement. Now, businesses with fewer than 50 workers will be reaching their “staging date”, when they will also have to offer a Workplace Pension.

The value of your investment can go down as well as up and you may not get back the full amount invested

Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor

The Financial Conduct Authority does not regulate taxation and trust advice.