Pensions
Pensions and retirement planning
Securing your retirement:
When it comes to providing for retirement, too many people are doing too little too late. Putting away even a small sum early on can make a big difference to the lifestyle you will enjoy when you retire.
The golden rule for most people, is to not rely on the State alone. Let's be honest, anyone whose only income is a State pension is hardly living in the lap of luxury - and the prospect is that State pensions will become even more meagre as time goes on.
Public Service Scheme?
Of course, if you are lucky enough to have the opportunity to join a public service scheme:
- Doctors,
- Healthcare workers,
- Teachers,
- Armed forces,
- Local government
Then you would be foolish not to join. Similarly, there are still some good 'final salary' private employer schemes. But many employees and certainly the self-employed are not so lucky.
Thankfully, modern personal pensions benefit from some very exceptional tax breaks, and nowadays, you can even contribute to your pension when you don't work! If you haven't done so already, you should explore what is on offer - although its better to start in your 20's than your 50's its never too late to begin saving for the day when you stop work.
The Day everything changed!
In April 2006, the government simplified the pension contibution process, Industry insiders dubbed these sweeping changes as A-Day. So what does it actually mean?
Previously, your contributions would have been limited to a percentage of your earnings, now there's one rule for all, which is of particular assistance to people in the 20 to 40 age bracket that may have put off investing in a pension. These groups can now put in larger sums later, instead of saving modestly, without being penalised for doing so. Remember, however, that the benefits of saving early can be substantial.
You can now invest up to 100% of your earnings, or £3,600 whichever is higher. However, two main limits apply:
- Annual Limit
If you pay in more than £225,000 (2007 / 2008 tax year) then you will have to pay tax on any payments over that amount. - Lifetime Limit
If your total fund value, including every pension you hold, is worth more than £1.6 Million (2007 / 2008 tax year) when you retire, then you will have to pay tax at a punishing 55% on any value above this lifetime limit.
Any money your employer pays into your pension will count toward
these limits.
Find out more!
If you would like to find out more about the financial benifits thata personal pension can offer and just how easy one can be set up then dont hesitate to contact us using the details located to your left. Please call us on 0845 683 5054.
Alternatively if you would like to request a call back then feel free to drop us an email using the contact form located on our contact page.