Retirement may seem a long way off, but it’s never too early to think about your pension. No-one wants to worry about money in their later years, and the one way to help prevent this happening is to save regularly into a pension throughout your working life.
Here are some simple but compelling reasons why you should think about your retirement planning now:
Request a State Pension Forecast
Although the Basic State Pension has risen to £159.55 per week, many people will receive less than this as the amount payable depends on their qualifying National Insurance record. Obtaining a pension forecast from gov.uk will show you what you’re likely to receive. Although it’s safe to say that on its own, it won’t equate to a very comfortable retirement.
Recover personal allowances
Making pension contributions is a good way of reinstating certain allowances and benefits as they will reduce your taxable income.
If you make contributions to a pension, or if your employer deducts your payments from your salary, you automatically receive 20% tax relief as an additional deposit into your pension pot. This means that for a Basic Rate Tax payer, a contribution of £800 is topped up by a further £200 from HMRC which is added by your pension provider to your pension pot. If you are a Higher-Rate taxpayer, you can claim an extra 20%, while those paying Additional-Rate tax can claim back an extra 25%.
Keep an eye on old pensions
Throughout your working life, you may also have paid into a number of pension schemes. As these will all have a part to play in your retirement planning, it makes sense to keep them under review. In certain circumstances it can make sense to consolidate past pensions into present arrangements, but you should always take financial advice before doing so as important benefits could otherwise be lost.
Will your pension go to the right person on your death?
One of the most important changes arising from the introduction of pension freedoms in April 2015, was the more generous treatment of pension funds on death. This means that it is very important to ensure that you have nominated the right person(s) to receive your pension benefits.
It’s important to be aware that problems could arise if, for instance, you may have nominated a previous spouse to receive your pension benefits but subsequently remarried and didn’t update your wishes. This could mean that your ex-spouse would receive the benefits under your pension, and that any children and stepchildren might not be provided for. Also, it should be noted that although the rules have changed many older pension plans do not provide the full range of benefits available.
So, if you’re self-employed, an employee, work part-time, run your own business or have accumulated pension pots with past employers, we can offer you advice about saving for a happy retirement. After all, retirement should be an enjoyable and fulfilling stage of life, not a time spent worrying about money.
To start your retirement planning today please feel free to contact Peter or Nick.
t. 01483 508580