Some people want to travel the world or take up a new hobby when they retire. Others see it as a perfect opportunity to volunteer with a local charity or start their own business. Whatever you are planning for the future, we can help you to make the most of your pension and other investments, and achieve the retirement you want and deserve.

How much money will you need in retirement?

Our work together usually begins with a discussion about what you want your retirement to look like. Then we can calculate how much money you will need to achieve your goals. Using this, we can analyse your savings and outgoings to find out how long your money will last and whether you’re on track – or what you need to do to get there. We call this cashflow modelling.

Saving towards your retirement

Saving for retirement is one of the most significant financial challenges faced by most people. Our financial planners can give you advice in a number of areas:

  • Using your annual allowance, and navigating the complex tapered annual allowance for higher earners

  • Making extra pension contributions using pension carry forward
  • Assessing your pension against the lifetime allowance tax charge

  • Using other savings and investments, such as ISAs
  • Ensuring your savings are held in high-quality investments

Find out more about pensions and retirement planning in this guide.

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Your investments

If you will be relying on investments held in your pension or other accounts for an income in retirement, it is especially important that your money works hard for you. Our investment professionals can make sure that it is – either by managing your investments for you or giving you advice on all your investment decisions.

We can manage your investments for you or give you advice on all your investment decisions.

They can also review your portfolio over time, ensuring it continues to reflect your needs and circumstances. This could be by reducing your level of investment risk as you get nearer to retirement, or switching the focus of your portfolio to generating an income when you retire.

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Find out all you need to know about the pension annual allowance in our guide.

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Taking an income

Retirement is no longer about simply saving into a pension and buying an annuity. After you reach age 55 we can help you to take an income in a way that suits your requirements while making the most of your various tax allowances. This could include taking pension lump sums, buying an annuity, selling parts of your investment portfolio and taking income from ISAs, dividends and cash savings. We can also show you how long your money should last and how much you can afford to spend each year.

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Get in touch to find out how our financial planners and investment experts can help you with your pensions and retirement.

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Passing on your pension

Passing on a pension has become a popular estate planning tool as they are free from Inheritance Tax. We can show you if you can afford to fund your retirement from other sources, potentially leaving your pension untouched and passing it on to the next generation tax-free.

Pensions and retirement frequently asked questions

1. What is the difference between a defined contribution and defined benefit (or final salary) pension?

A defined benefit pension (also known as a final salary pension) is usually set up by your employer. It guarantees you a regular income in retirement, usually based on your salary and the number of years you have worked. The level of income may also increase in line with inflation.

On the other hand, defined contribution pensions do not offer you a guaranteed level of income. The amount of money you will have in retirement depends on how much you or your employer has contributed and how well your pension investments have performed.

2. How much can you pay into a pension?

Usually you can pay as much as you earn each year into your pension, up to a maximum of £40,000. This is your annual allowance.

The allowance reduces for people with an adjusted annual income of £240,000 or more, down to a minimum of £4,000. This is known as the tapered annual allowance.

3. What is the tapered annual allowance?

The usual £40,000 annual pension allowance is cut for people with an adjusted annual income of £240,000 or more. The allowance reduces by £1 for every £2 of income above £240,000, down to a minimum of £4,000. This is known as the tapered annual allowance.

4. What is pension carry forward?

Pension carry forward lets you pay more than your annual allowance into your pension by ‘carrying forward’ unused allowance from the previous three tax years (as long as you have sufficient earnings). You still will receive tax relief on the payments and it can be useful for those affected by the tapered allowance.

5. What is the lifetime allowance and how much is the tax charge for breaching it?

The lifetime allowance is the amount you can hold in your pension over your lifetime. The allowance is currently at £1.0731 million. Your pension is assessed against the allowance when you take benefits, die or reach age 75. Any excess is taxed at 25% on top of Income Tax if taken as income, or 55% if taken as a lump sum.

6. What are the tax benefits of pensions?

Investments in pensions grow free from Income Tax and Capital Gains Tax. Pension contributions are paid from gross (pre-tax) income. Where tax has already been paid on a pension contribution it is refunded. The taxman will automatically top up pension contributions up to your annual allowance by 20% to cover basic rate tax. Higher or additional-rate tax payers can then claim back any higher or additional-rate tax that they have paid on contributions through their tax return.

7. What are your options for taking an income from your pensions?

You can normally take up to 25% of your pension tax-free – either as a single lump sum or as a series of smaller withdrawals. You can also take a regular income from your pension by making lump sum withdrawals, buying an annuity or setting up income drawdown.

8. What happens to a pension when you die?

A defined benefit (final salary) pension will usually stop paying an income when you or, if your pension income passes onto a dependant, your dependant dies. A defined contribution pension can be passed on to your beneficiaries. If you die before the age of 75 the pension will be passed on tax-free. If you die after 75, your beneficiaries will pay their usual rate of Income Tax on any money taken from the pension.

9. Do you pay Inheritance Tax on pensions?

Pensions do not usually form part of your estate so they are not charged with Inheritance Tax when you die. However, any income or lump sum death benefits paid from your pension may form part of your estate and therefore be liable to tax.

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