Retirement and pensions

It has never been more important to plan properly for your retirement. We are all living longer and leading far more complex lives. The State pension alone will not be enough to ensure that you have a comfortable retirement. We can help you identify your goals and develop strategies to help you achieve them whether you are just starting out or a little further along the road. Our qualified specialist advisers can help you identify what you need to do now to help you along this path. The areas you should consider include:

When will you actually retire?

Will this be on a set date or will you phase it in over time? Do your existing pension plans match that date and if not how will you bridge that gap? Our advisers are here to help you design a strategy to ensure that you get the right amount of income when you need it.

How much income will you need in retirement?

We can help you analyse your existing costs and project them into the future. This will allow you to work out whether or not you are on target or if you need to alter your level of saving now.

Your own personal rate of inflation?

It is generally accepted that the retired face a much higher rate of inflation than younger families because they do follow the same buying patterns. So for example, retired people tend to spend more on energy costs as they are at home all day and less on mortgages and childcare. It is therefore very important to identify what rate of inflation you face and to include the effects of that inflation in your retirement planning. For example if inflation is running at 2.5%, a pension of £10,000 would need to increase to £16386 over 20 years to retain the same buying power but if inflation was running at 5%, the figure would be £26533

To ignore inflation when planning your retirement, could dramatically impact on the quality of life you would experience and our advisors are here to make sure that you achieve the retirement you dream about.

Your existing pensions – building up your retirement benefits

There are three different types of pensions that you should consider when planning your retirement:

1. State PensionsThere are a variety of State pensions that can be paid to those who have paid sufficient National Insurance contributions throughout their working life or to their qualifying dependants on their death. The Government has proposed sweeping changes to the current system that are due to take effect in the next few years and our advisors are here to help guide you through the maze of State pension legislation.
2. Personal PensionsPersonal pension plans are essentially a very efficient investment plan that gets special tax treatment to help your money grow as quickly as possible. You and maybe your employer contribute into the plan. The money is invested and a fund is built up.The schemes provide retirement incomes based upon how much money you have saved in your pot (the fund size) and what rate of income you can buy with your pot (the annuity rate). The bigger the pot and the higher the annuity rate the more money you will receive as a retirement income.Our advisors can help make sure that you build up as large a fund as possible and help guide you through the maze of investment risk and how much you should take and the different schemes and investment funds available to you.
3. Occupational plans run by your employerGenerally speaking, it is always a good idea to join pension schemes offered by your employer as normally they contribute into the scheme and have often negotiated better terms from the pension company than you would be able to as an individual. If you are unsure we are happy to help evaluate such a scheme and can provide comparison reports if you are considering moving jobs and need to understand the value of a new remuneration package when compared with your existing one.

Taking your retirement benefits – types of assets, time scales, exhausting assets

You can take an income from your accumulated funds at any age from 55 (subject to plan restrictions). You will need to identify what kind of retirement income you will need, whether or not you need to build in extra benefits for a spouse for example and the best way of achieving these objectives.

There are 3 ways of taking your benefits:

1. Annuities ( these can be enhanced if you are in ill-health)
2. Drawdown contracts where your money remains invested and you draw an income direct from the fund
3. Third way products that are, as their name suggests, a combination of both.

We can help you evaluate your options and decide the most appropriate solution according to your own individual needs.

Auto-Enrolment and how it affects you

The Government wants to encourage people to start saving for their retirement as early as possible. Therefore from October 2012 all employers started to join the Auto-Enrolment process which means that they will need to automatically join you into a qualifying workplace pension if you fulfil certain criteria.

Your employer will auto-enrol you if

• You are not already in a qualifying scheme at work
• You are aged 22 or over
• Are under State Pension Age
• Earn more than £9440
• Usually work in the UK

The process started in October 2012 for large employers and smaller companies will follow over the next few years. Your employer will notify you of the date nearer the time.

Once you are in the workplace pension, you will make contributions that will be deducted from your pay, along with contributions from your employer and tax relief from the Government. There are strict controls on the minimum that can be paid and on the associated costs of these schemes.

You are able to opt out of the workplace pension but you should consider this step very carefully as it is highly unlikely to be in most people’s best interests. There are very strict guidelines on how these schemes are run and what the employer must do.

You will be given full details nearer the time but we are happy to help you understand how this new legislation will affect you.

The value of your investment can go down as well as up and you may get back less than you have invested.