Financial planning for your retirement
Maintaining your standard of living in retirement is a concern for many people. The Government’s message that individuals need to be taking more responsibility for their financial wellbeing must be taken on board with the State no longer providing an adequate retirement pension, the rapid decline in final salary pension schemes and increased longevity.
Your situation is complex
Many people’s pension situation is complex, with a number of different pension schemes being accumulated over their working life. As part of our financial planning process, we will take time to unravel the detail and consider whether you have adequately provided for your retirement.
You need sound retirement planning advice
You can do much to ensure that sufficient critical capital is built up. This may include the best use of your annual Individual Savings Account (ISA) allowance or setting up a stakeholder pension. For larger sums, a Self Invested Personal Pension (SIPP) might be appropriate. At Financial Design, we can give you useful SIPP advice, ensuring that any SIPP investments you might make are consistent with your retirement financial planning goals.
You need tax efficient solutions
We will always consider the tax implications of our advice. However, any decisions should be made in the context of your overall financial plan, rather than to achieve a short term tax benefit.
A financial planner who understands legislation
The Government's radical Pensions Freedom announcements during 2014, has provided greater flexibility for those people approaching, or over age 55. Pension freedom now gives people the choice to draw upon pension funds, in part or in full, which could create a fantastic planning opportunity. We specialise in retirement planning and can offer you the very best in retirement planning advice to help you consider the best options available for you. When you reach retirement, there are a number of ways you can use your pension fund to provide you with an ongoing income.
Check Your Potential Retirement Income.
Tax-free Cash
Usually a personal pension fund carries the option to take 25% of the fund as a tax-free lump sum. If a maximum income is required, it is usually better to take your maximum allowance of tax-free cash from a money purchase pension plan. However, this depends on individual circumstances and we can assess this to make sure it is right for you.
Lifetime Annuities
With a traditional annuity, you pay the money in your pension pot to an insurance company in exchange for a guaranteed income for the rest of your life. After your death, the income ceases and the insurance company keeps the balance of the initial investment. You can purchase an annuity based on single or joint lives. A ‘reversionary annuity’ is also available, in which the pension is payable in full for the lifetime of the annuitant and then on their death a reduced pension will be payable to their dependant.
Income Drawdown
As an alternative to a conventional annuity, you can choose to purchase an unsecured pension, previously known as a drawdown. As part of the investment choices within an Income Drawdown plan (IDD), you can buy a short-term annuity. The maximum income is the equivalent of 120% of the Government Actuary department rates and there is no minimum requirement.
Phased Income Drawdown
Phased Income Drawdown is an option best suited to those under the age of 75 who do not require full access to their tax free cash. It can be particularly tax-efficient in that income is made of both capital and tax free cash. As for traditional Income Drawdown, only those with larger pension funds and a more active interest in pension fund management should consider this type of scheme.
Enhanced Annuities
It is now possible to obtain underwritten annuities for individuals in ill health. One obvious form of enhanced annuity is for cigarette smokers. In the same way that smokers may now pay 25% more for their life cover, smokers could obtain up to 15-20% better annuity rates.