When you imagine your future, what age do you see yourself retiring and what standard of living do you expect to enjoy? If you have a clear picture in your mind, do you also have a clear pension plan to make this image a reality?
Our new free guide to pensions is designed to help you understand the three different types of pensions and the various stages throughout your life when you should seek professional advice.
Should I be saving into a workplace pension and a personal pension too?
Understanding the basics of pensions begins with knowing the difference between the three types of pensions; a workplace pension, a personal pension and the state pension. People can fund their retirement using one, two or all three of these.
Thanks to auto-enrolment, most working adults in the UK are now saving into a workplace pension, and this should be your first priority, however you might want to consider saving into a personal pension as well. There are also over 4.8 million self-employed people working in the UK now (Office for National Statistics, 2018), who are solely responsible for their pensions.
If you are yet to start saving into a pension scheme, not only do you need to decide which type of pension will fund your retirement and how much you can afford to pay in annually, but you also need to choose from a multitude of pension products from various pension providers.
The complexity of choice can cause people to delay starting a pension, or not review their chosen pension until it’s too late to make any valuable new savings. The sooner you start saving, the better quality of retirement you can enjoy, as well as avoiding any last minute panic if you haven’t saved enough.
Four moments when you should seek professional advice for your workplace pension or personal pension
You can and should seek professional financial advice at any time you feel you need it, but here are four key stages to pension planning that you might consider to ensure you maximise the benefits of your pension:
Choosing your pension – which pension provider and product will support your ideal retirement lifestyle?
Reviewing or transferring your pension – has your situation changed since starting your pension? Do you need to transfer your funds to another pension?
Reaching age 55 – do you need early access to funds? If so, how will you access money tax efficiently?
Retirement – do you need to reinvest savings or plan inheritance?
Workplace and Personal Pensions Advice from Newcastle upon Tyne IFA Laurus Associates
Laurus Associates director Karen Barwick said:
“People seek pensions advice because there are a variety of options available on the market, and there isn’t a ‘one size fits all’ solution. We have to understand your future plans and ideal lifestyle, and then work backwards to find the right pension product to support this.
“For the majority of pension savers, you should always join your Employers scheme, as they will contribute to your plan, which gives your plan an immediate boost, in addition to your own contributions.
“How much you put into your pension each year is related to how much you earn. When saving into either a workplace pension or a personal pension plan you will receive 20% tax relief that is paid into your pension pot. So if you pay in £800 annually this is topped up to £1,000. This means each year that passes is a year missed out on extra funds for your future.
“There are also adjustments and different routes you might like to explore even after starting a pension. For instance, many people aren’t aware that you can carry forward unused annual tax relief. You may also see a change in your life or career that could see you needing to transfer your funds. There are also different options for minimising tax implications should you need to access funds early for any reason. This is when professional advice will help you get the most out of your pension.
“Your retirement is the time to relax and enjoy life having worked hard for many years. Taking the time now to plan for the future helps to avoid any unnecessary stress and ensures you get to do all things you hope for.”
Your free guide on pensions below will give you all the information you need to help you choose the right pension product, or review your pension plan for retirement.
Your guide includes:
Getting grips with the basics of pensions
Finding the right pension for you
Understanding tax relief on your pension contributions
Understanding the limits to annual contributions
Top tips to get you started
Speak to Karen or Colin to discuss the best pension providers and products available that would support your plans for retirement.
Click here to see the free Laurus Associates Guide to Pensions.
The Laurus Associates Financial Guide Series – Next week Inheritance Tax
Check back on the blog for your next free guide in our series on financial planning, coming soon.