Pensions

With the introduction of pension simplification in April 2006 known as ‘A’ day there has been many changes in pensions both pre and post retirement. This is making it vital that advice is available. I have detailed some of the key points below:

Lifetime Allowance £1,500,000 this will increase over time but effectively if your fund grows to more than this you will be taxed on the excess.
Annual Allowance £215,000 is the maximum contribution into a pension, you can contribute 100% of salary or net profit and receive full tax relief.
Tax Free Cash 25% is available from all types of pension including protected rights (serps).
Retirement Age From April 2010 age 55 is the earliest that benefits can be taken.

For more information please forward an enquiry or you can contact us on our freephone number 0800 783 6748

Stakeholder Pensions. 

These were introduced in April 2001 with the aim of getting more people investing in pensions, as employers had to offer a scheme to their employees. Stakeholder pensions are consumer friendly and offer a clear charging structure with maximum annual management charge of 1.5% of fund value with no exit penalties, or transfer penalties. This means that you can retire any time after age 55 and the full value of your will be available to buy your pension benefits.

Personal Pensions.

These were introduced in 1988 and can have much higher charge than a stakeholder pension, many product providers have brought their charges in line with Stakeholder pensions ,however this is not guaranteed and could change in adverse market conditions. A personal pension could still be the best option as providers now have external fund links that can perform better than Stakeholder funds.
 

SIPPS.

Self invested pensions are similar to personal pensions in that you can invest in many more funds.They can also hold commercial property, shares unit trusts and oeic,s. They can have a drawdown facility and some allow tax free cash to be taken with the ability to continue to invest the remaining fund and contributions.

Annuities.

This is the traditional method of purchasing a pension in retirement. The benefits available are guaranteed for the life of the annuitant and a pension can also be provided for the lifetime of the spouse. Many options are available and it is worth taking advice as an open market option is available letting you purchase an annuity from another provider if they provide better rates.

Drawdown/Phased Retirement.

These are relatively new options where you can remain invested and take different level of income . As you remain invested there is risk involved and the fund that you have  at age 75 when you have to buy an annuity could have reduced, annuity rates could also have reduced ,therefore this type of arrangement is only suitable for large funds and where other liquid assets are available.

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