It may be tempting to say, ‘But retirement is a long way off’, yet it’s never too early to start investing in order to protect your future. To afford the lifestyle you want when you retire, you need to do something about it today. You now have a much greater choice when it comes to how and when to take retirement benefits from pensions since the pension simplification rules were introduced.


UK’s pension tax regime radical overhaul

On April 6, 2006 major changes were introduced to the structure of UK pension schemes. These changes heralded probably the most radical overhaul of the UK’s pension tax regime. The new simplified regime was largely a replacement of the past pension framework as opposed to the addition of another layer of legislation.

The most important thing is to plan your retirement funding strategy in advance. Anyone investing in a pension should remember that whilst pensions are extremely tax-efficient, it’s important to regularly review where your money is invested. This becomes more important as you begin to approach retirement when your investment aims may gradually change from growing the value of your pension fund to protecting it. A private personal or stakeholder pension scheme could be right for you if:

- you want to save money for retirement in addition to your occupational workplace pension

- you’re self-employed, so don’t have access to an occupational workplace pension scheme

- you aren’t working but can afford to pay into a pension

- your employer offers it as an occupational workplace pension

Personal and stakeholder pensions are ‘defined-contribution’ private pensions that you arrange yourself. You contribute money into a pension fund which you use to buy a regular income when you retire. Sometimes employers set up group personal or stakeholder pensions for their employees.

Tax-efficient environment

Personal private pensions grow in a tax-efficient environment. You pay no capital gains tax on any growth and no further UK tax on any income the investments produce, and income from fixed-interest investments and deposits are received gross.

UK investors under age 75 can benefit from up to 45% pension tax relief (2013/14 tax year).

The higher your rate of tax, the more tax relief you could receive. Even non-earners, including children, and those with an income under £3,600 can benefit, but can only contribute up to £3,600 this tax year.

You deserve a comfortable retirement where you don’t have to worry about getting by on a State Pension and other benefits. By acting now and putting in place your pension arrangements, or by reviewing your current pension provision, you’re making sure that you can really enjoy your retirement. Contact us to discuss how we could help you plan – don’t leave it to chance.