Pensions are, of course, designed to enable you to save sufficient money during your working life to provide an income stream for you to live comfortably after you have retired.
There are many different ‘tools’ used to save for retirement and the taxation and investment elements of pensions can appear baffling. We specialise in explaining, recommending and monitoring pensions for you. Below are the most common sources of pension to fund for your retirement.
Single Tier State Pension
The new State Pension will be a regular payment from the government that you can claim if you reach State Pension Age (SPA) on or after 6 April 2016.
You’ll be able to get the new State Pension if you are eligible and:
• a man born on or after 6 April 1951
• a woman born on or after 6 April 1953
If you reach State Pension age before 6 April 2016, you’ll get the State Pension under the Basic State Pension and Additional State benefits headers as shown below.
The full new State Pension will be £155.65 per week (2016/2017).Your National Insurance record is used to calculate your new State Pension. You’ll usually need 10 qualifying years to get any new State Pension. 35 years qualifies for the full amount.
The amount you get can be higher or lower depending on your National Insurance record.
The Basic State Pension (Prior to 2016/2017) – for people who have paid sufficient National Insurance contributions while at work or have been credited with enough contributions. **
Additional State Pension (Prior to 2016/2017) – referred to as the State Second Pension (S2P) but before 6 April 2002, it was known as the State Earnings Related Pension Scheme (SERPS). From 6 April 2002, S2P was reformed to provide a more generous additional State Pension for low and moderate earners, carers and people with a long term illness or disability and is based upon earnings on which standard rate Class 1 National Insurance contributions are paid or treated as having been paid. Additional State Pension is not available in respect of self employed income. From April 2016 both the basic rate pension and additional state pension will be combined to offer a simple single tier flat rate pension. **
An Occupational Pension (through an employers pension scheme) – This could be a Final Salary Scheme (sometimes referred to as a Defined Benefit scheme) or a Money Purchase scheme (usually referred to as Defined Contribution). Pensions deriving from Final Salary schemes are usually based on your years of service and final salary multiplied by an accrual rate, commonly 60ths. The benefits from a Money Purchase scheme are based on the amount of contributions paid in and how well the investments in the scheme perform.
Personal Pensions Scheme (including Stakeholder schemes) – these are also Money Purchase schemes and are open to everyone and especially useful if you are self-employed, your employer doesn’t yet run a company scheme or just for topping up existing arrangements. From October 2012, the Government introduced reforms and all employers have to offer their employees, who meet certain criteria, automatic enrolment into a workplace pension. Employers can use the Government backed scheme, National Employment Savings Trust (NEST), or offer an alternative ‘Qualifying’ work place pension scheme such as a Group Personal Pension, providing it ‘ticks’ certain boxes. The process is being phased in between 2012 and 2018 depending on the head count of a firm. Employers are required to contribute a minimum of 3% of salary with Employees making a personal contribution of 4% with tax relief of 1% added on top, which again, is being phased in gradually.
Retirement Options – there are now a vast array of different products that may be used at retirement to provide benefits from the traditional form of annuity that provides a regular income stream to Flexi-access drawdown which enables lump sums of benefits to be taken either as a one off payment or over a given number of years. Given the complexity and choice all individuals now have it is important to seek independent financial advice before making any decisions.
State Pensions may not produce the same level of income that you will have been accustomed to whilst working. It’s important to start thinking early about how best to build up an additional retirement fund. You’re never too young to start a pension – the longer you leave it the more you will have to pay in to build up a decent fund in later life.
** For those who reach state pension age on or after 6th April 2016, these no longer apply.
I have an excellent working relationship with Richard, he has been dealing with my finance for the past few years and would recommend him to anyone who seeks financial advice.
We have known Richard for a number of years and are therefore confident that the advice he gives can be relied on to be carefully considered for our financial requirements and resources through his professional knowledge and personal interviews. He reviews our financial planning at regular intervals and is always available to discuss any matters promptly and gives straight forward explanations of our investments in a friendly and informative manner.
I can not recommend high enough the first class service I have had from Paul and his team dealing in all aspects for my family and friends.
I have known Richard for many years now, originally through Lloyds Bank negotiations and more recently as my financial advisor. I consider it an honour to be taken on as one of his private clients and would thoroughly recommend him to anyone seeking advice about financial matters. Richard is a very astute and friendly person. His dealings on my behalf are extremely well prepared and thoroughly researched. He is most patient and tolerant when I need clarification on any point and I am always treated as if I am Richard's only client. In these uncertain times he is always someone on whom I can rely and am very grateful for all his help and advice.
Paul from Southernhay arrived at our hour of need, like anyone self-employed we are always classed as odd! Well after he parked his white charger he came in took some details and went off to see what he could do. A day or so later Paul had let us know he had spoken with our accountant and lender with an in principle decision, WOW! So with a little bit of form filling (all correct but relaxed and not pressurised which comes from Paul's experience) mortgage dealt with in weeks not months and cover in place. Job done! I would recommend Paul to anyone wanted to look at Mortgage finance, the transaction was a pleasure from start to finish!
After the sudden death of my husband of 42 years, I was left to make sense of our investments and savings. Claire came to my house and helped me plan my financial future. She took care to explain my options. Her professionalism and knowledge is impressive. I can pick up the phone to her at any time.
I feel extremely confident in the hands of Claire and the team. Nothing is ever too much trouble. Claire arranges regular consultations and takes time to explain anything that I may not understand, answering any questions and researching product information to provide the very best advice. All in all a great service that I would highly recommend.
I have referred clients to Claire Taylor for the past 10 years. Claire provides a high quality, client focussed and pro-active financial advisory service and develops excellent long term client relationships. Her level of knowledge and expertise in the financial services sector is first class and I would not hesitate in recommending clients to her and her company.