Pensions
Accumulating
Maybe you have a workplace pension, or your own personal pension, but are you putting aside enough to reach your retirement goals? Will you have enough for that permanent vacation in the future?! Will you be able to choose when to stop, or slow down, in your working life? If this is something, you have asked yourself – or maybe never thought of before, this is a question we can help you answer.
You may even be self-employed and wanting to setup a pension for the first time but do not know where to begin. This may feel daunting – so let us help you put a bespoke life plan in order to aim to achieve sustainability of income in your later years.
Once we look into your current pensions and investments, and reassess, you never know, you could even look to retire earlier than your current projections.
One big viewpoint to think about pensions is tax planning – You could reduce your level of income tax by investing into a pension. If you want the unabridged version you need to click here.
Income Drawdown
If you are looking to retire or looking to decrease your working hours, it is very important that finances are allocated accordingly. At LFM we will advise you on the range of pension schemes available that can provide income and are best suited to your personal circumstances. We consider those providers that are performing well, and importantly those that offer an above average level of service, as well as considering cost. We want to ensure you have the best possible chance to obtaining a steady, sustainable income, to help you continue or even improve on your lifestyle.
You may well have read about ‘Flexible Access (Income) Drawdown Pensions’ – The key is flexibility in order to match your possible variable income requirements. It can also help from not only an income tax planning point of view, but also to reduce your Inheritance Tax (IHT) liability.
We will assess your portfolio and fully discuss your retirement options so that you understand all the benefits and implications.
Tax-Free Lump Sum
You may have reached the age where you can access your personal pension and you are looking to take your tax-free lump sum of up to 25% of your overall pension. You may want to take a regular income along with this – or not and still continue working. It is your choice but we can help you with those choices to ensure they are the most beneficial to you and your needs.
It is pertinent for you to know what you are taking and the implications. We can help you make sure you are making the best decision by ensuring you understand what you are doing. Last thing you want is to take all your tax-free cash, with no reason bar you know it is something that can be done to end up just leaving all of it sat in an account, with it eroding away due to the impact of inflation!
Annuity
Whilst an Annuity could seem like a thing of the past, and you no longer need to take one, but they can still be a useful tool as part of you retirement portfolio.
An Annuity is a financial product that gives you a guaranteed income for the rest of your life in exchange for you providing a lump-sum upon commencement.
An Annuity doesn’t need to be taken at the outset of your retirement, it can be bought at any point. With this, there is no golden answer to when is the right time to buy an Annuity or even is an Annuity value for money.
Want to find out more?
Send us a message if you’d like more information about the pensions services we offer, and one of our friendly team will get back to you.
FAQ
Most frequent questions and answers
Please note content within our website should not be treated as advice or a recommendation.
Yes, Drawing down a regular income, or a lump sum, from a pension fund is usually treated as taxable income, with personal tax allowances being the same in retirement as during your working life. However, normally 25% of the pension fund is tax free. It is possible that you were a higher rate tax payer whilst contributing to your pension, attracting higher rate tax relief, but you are a basic rate tax payer in retirement. Hence effectively deferring taxable income at 40%, to take retirement income at a 20% tax rate (after the 25% that is tax free).
You can nominate a beneficiary or beneficiaries to your personal pension.
Even if you have a will, nominating beneficiaries to your pension plan, can help streamline the process of transferring the funds to them.
One of the big benefits of passing on your wealth through a pension wrapper, is it sits outside your estate for inheritance tax (IHT) purposes.
If you would like further help with estate planning and making sure your affairs are in order, please get in contact.
Yes, you can cash in your total pension fund but this is not usually advisable due to income tax implications, unless a small or trivial fund, but depends on your personal tax situation. Whilst you can flexibly drawdown on your pension, another option is to take an Uncrystallised Funds Pension Lump Sum (UFPLS).
To help you with your financial planning and to give you the help and advice you need to make an informed decision with your pension, get in contact with us.
Essentially a personal pension is a product where you can place investments within. Much like an ‘ISA’, a Pension is a ‘Tax Wrapper’. The main functions of the pension is you contribute into a pension which is an investment plan with long term tax advantages. The contribution you make, whether a regular (monthly) amount or a single lump sum, attracts basic rate income tax relief at source, e.g. a premium of £8,000 immediately becomes an investment of £10,000 – an uplift of 25%. This can also be offset against your higher tax rate of 40% (if applicable to you), to further reduce your income tax liability by 20%. i.e. £2,000 in this example.
When you wish to take your pension benefits (currently the earliest is age 55 for most people), then you are likely to have access to 25% of your fund tax free and the balance is taxable income. If you wish to understand the options available to you for saving for your retirement, then please get in contact.
Answering a question, with questions…
Is the state pension going to be enough to achieve your forecast income requirements?
Do you want to retire or receive an income before you reach state pension age?
The full state pension is set to rise to around £10,500 per year in 2023, and currently payable from age 66, or 67 and rising further. Most people would desire an income greater than this. So you need to provide for your own future, and investment into a personal pension is an attractive way to do this. Please contact us to find out why..
Economies in turmoil with food and energy inflations at the end of 2022 at a all time high,
But let’s not forget that falling inflation, does not mean fall in prices!
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