Pensions & Retirement Planning

It’s important to plan ahead for your retirement. Here, we explain why pension planning is so critical, and describe some of the options available to you. This information is intended only as guidance. For advice on your specific circumstances, please get in touch.

The value of your pension can fall as well as rise and you may not get back the original amount invested.

A pension is a long-term investment not normally accessible until 55. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

The Value of Retirement Planning

We all know it’s important to plan for retirement, but many of us are still not planning well, or early enough.

Despite all the media headlines and Government initiatives, many of us still have a ‘tomorrow will do’ attitude. This is worrying for one simple reason – we are going to live longer than most of us think.

Those approaching retirement today have many more opportunities and challenges to face than their parents ever did. There are also many more ways to fund retirement, adding to the confusion about how to best prepare for all your needs.

Personal Pensions

Personal pensions may be suitable if you’re employed and not in a company pension scheme, or as an addition to a company pension. You may also wish to set up a personal pension if you are self-employed or if you are not working but can afford to put aside money for retirement.

You pay a regular amount (usually monthly or annually), or a lump sum to the pension provider who will invest it on your behalf.

Funds are usually run by financial organisations like banks, insurance companies, and unit trust companies.

The final value of your pension fund will depend on how much you have contributed and how well the fund’s investments have performed. The companies that run these pensions charge you for starting up and running your pension. Charges are normally deducted from your fund in the form of fund management charges.

Income Drawdown

Income drawdown plans are complex. It’s a good idea to get professional advice because what you decide now will affect your pension income for the rest of your life.

Income Drawdown is a more flexible alternative to the traditional annuity route, offering greater choice and control for many people. Typically, Income Drawdown suits people who are not averse to investment risk, and who have larger pension funds.

However, there are no guarantees that income will be greater than if the fund was used to purchase an annuity at retirement. There is also no guarantee that the initial income level selected will be maintained. The costs of Income Drawdown are normally higher than for an annuity.

This article is intended to provide a general appreciation of the topic and it is not advice.

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