Pension Planning

We all know that the United Kingdom is suffering from an ageing population and more and more pensioners are relying on a smaller workforce to fund state pensions.  Successive governments have recognised the need for individuals to make extra provision for retirement by offering tax concessions to personal pension savers and company pension schemes.  However, it is recognised that many people will not enjoy financially secure retirements without being encouraged to take more action on an individual basis.

The pensions market is vast and there are numerous products to choose from, each with different charges, fund performance and legislation. It is important to ensure that your contributions are adequate to provide you with the income that you would like to receive in retirement.

Currently the pension tax breaks offered by the government are 20% for basic tax rate payers and 40% for those paying higher rate tax.  It is not often that HMRC actually give us money, so it makes sense to take advantage by ensuring that you have affordable tax efficient pension arrangements in place.

Many employers are obliged by law to offer a pension scheme to employees. If you are lucky and your company contributes, it is usually sensible to take advantage of such a scheme. If you are self-employed, a stakeholder pension could be the way forward. Stakeholder pensions were introduced in April 2001 with the intention of encouraging those with lower incomes to plan for retirement. These pensions aim to be straightforward, low cost and flexible. For the more adventurous, a self invested personal pension (SIPP) allows you to manage your own investments.

You can contribute to as many pensions as you like, as long as you don’t exceed the maximum levels for contributions set by HMRC.  In theory, the more you contribute the greater your retirement income.

Sense can advise you on the use of pensions to provide a tax efficient way to save towards retirement whilst at the same time maintaining your individual investment strategy along the way. Using our Pension Audit Service we can also review your existing pension arrangements and take these into account in developing your overall pension strategy.

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