Pensions

Is a tax-efficient way of saving for your retirement? There are three different types of pension, and you can have more than one kind should you wish to.

1 Employers Scheme- This is a pension scheme that’s arranged by your employer. If you’re between 22 and State Pension age, work in the UK and earn more than £10,000 a year, your employer must enrol you in a scheme.  A percentage of your pay goes into the pension scheme each payday and your employer adds money to the scheme for you too. There are 2 types of workplace pension:

Defined contribution – a pension that’s based on how much money has been paid into it. The money paid into the scheme is invested by the pension provider. The amount available to you at retirement depends on how much has been paid in and how well the investments have performed
Defined benefit – sometimes referred to as final salary pensions. The money you get back doesn’t depend on investments, but is based on your salary when you retire and how long you’ve worked for that employer

2 The State Pension is essentially a regular payment people can claim when they reach the State Pension age. How much you get depends upon your National Insurance Contributions, with the government determining your pension payments through the credits you’ve accrued throughout your life.

retirement planning advisors near me

3 Self-invested personal pension (SIPP) is a type of personal pension that lets you manage how your money is invested. You choose which investments to invest your money in and actively manage those investments. SIPPs are often more suitable for large contributions and, because you control how your money is invested, they might be better for experienced investors. They can also have higher charges.

Pension Review

pension financial advice

You may think that just because you have a pension plan in place, you’re financially prepared for the future.

Due to tax relief on contributions you are being given £20 for every £100 invested (even greater for Higher Rate Tax Payers) meaning pensions are undoubtedly effective in accumulating future income in retirement.

The pension landscape has diversified a lot over the years. And if you’ve previously enrolled in a plan with a specific funding pattern and investment approach in mind, it’s feasible to assume that everything’s ticking along as expected

But if you enter retirement without reviewing your pension schemes and investments, the sum accumulated may not live up to your expectations. You may even discover that you chosen plan may have become unsuitable for your situation years ago, that’s why it’s important to have them regularly, and what the process should involve.

Final Salary Scheme

A defined benefit pension scheme – sometimes called a final salary pension scheme – is one that promises to pay out an income based on how much you earn when you retire. Unlike defined contribution (DC) pensions, the amount you’ll get at retirement is guaranteed, and it will be paid directly to you – you won’t have to use your pension pot to decide your next move.  This guide explains how final salary schemes work and how you can work out how much income you could get in retirement.

DB pensions are often seen as more generous, because it would take an above-average defined contribution (DC) pot to be able to buy an annuity that pays you the same amount as a DB scheme.  What’s more, the payouts from a DB pension are guaranteed for the rest of your life. So long as the pension scheme itself remains funded, your pension income will be paid no matter how long you live. 

retirement financial advisor

You don’t have to stay in your pension scheme. You do have the option to transfer out of your final salary scheme. Given final salary pensions are an expensive long-term promise, many pension funds are offering attractive cash equivalent transfer values to encourage members to leave the scheme in exchange for a pot of cash. 

SIPP (Self Invested Personal Pension)

pension financial advisor

The term SIPP stands for Self Invested Personal Pension. As the name suggests, with a SIPP pension plan, a member has much more autonomy and control over the range of asset classes where they can invest their money.  A SIPP is a form of personal pension which offers a greater degree of investment choice than would be available from a traditional pension provider. A SIPP acts as a wrapper that can hold a wider variety of different types of asset class.  As members are allowed much greater freedom to dictate how their pensions are invested, SIPPs are often referred to as ‘DIY pensions’.

Self-employed Pensions

Most self-employed people use a personal pension for their pension savings. With a personal pension you choose where you want your contributions to be invested from a range of funds offered by the provider.

Whether you have plenty of savings to invest in your pension, or saving into a pension is a stretch for you, there are pension options to suit every need. 

A defined benefit pension is common for the employed – it pays out a retirement income based on your salary while you were in employment. Self-employed pensions are defined contribution pensions, and these function more like a tax-friendly savings account. 

pension financial advisor near me

Pension Transfers

pension financial advisor near me

Transferring or Combining your pension pot can make it easier for you to plan for your retirement. Before you transfer, however, it’s worth considering reasons why it may be the right decision for you.

The benefits can be;

  • Combining into one pension saves you the hassle and paperwork of managing different plans. You only have one company to contact and one place to see how your retirement planning is going.
  • Help you understand what you should consider before transferring to us. If it’s right for you, we’ll help you follow the steps to make it happen.
  • We will make it easy to transfer your pensions. But we also know there are things about combining pensions you might not understand. That’s why we have advisers who can explain the process and give you the information you need to make an informed decision.

Pension Drawdown

Income drawdown, or pension drawdown, is a way of using your pension pot to provide you with a regular retirement income by reinvesting it in funds specifically designed and managed for this purpose. The income you get will vary depending on the fund’s performance. Since your money stays invested, and it’s usually in the stock market, there is the risk that your fund may fall in value. The upside is that investment growth can provide higher returns and see your pot continue to increase in value. It isn’t guaranteed for life. It’s different to an annuity because your income isn’t guaranteed, and the size of your pension pot can grow or reduce, depending on how your investments perform.

free pension advisor

Ready to Make a Change?

We are ready to help you to find a local FCA regulated adviser for free

Schedule A Call Today

Find My Local FCA Advisor

Schedule A Call Today

Find My Local FCA Advisor