1. Review your existing pensions regularly
It is sensible to review your pensions at least once a year to help ensure that you are on track to meet your retirement goals and to understand what your pensions are likely to provide for you when you retire. Put simply, not reviewing your pension could have serious implications for your comfort in retirement, as you don’t want to find out that you’re not on target to achieve the standard of living you want in retirement when it’s already too late.
Make sure you understand how your pensions are performing and keep an eye on any under performing funds.
You should also beware of high charges. Typically, pensions have lower costs now than they used to, so if you have older pension plans that were set up some time ago, you may be paying more in charges than you should be.
2. Join your company pension scheme
It makes sense for most people to join their company pension scheme. These schemes are usually good value and auto enrollment means that all employers now have to pay into eligible employees’ pensions.
3. Choose the right investments for you
When choosing investments within a pension it can often pay to spread them around to reduce the level of risk. For example, investing in just one fund can carry the risk that if that fund manager performs badly, your entire pension fund will suffer.
Investing in shares is likely to give you the best long term returns, although as your pension fund gets bigger and as you get closer to retirement you may want to hold more money in other assets such as cash, fixed interest and property, as capital protection becomes as important as capital growth.
4. Don’t forget about your State pension!
From April 2020, the full new single-tier state pension is £175.20 a week, meaning that those who are entitled to it will receive over £9,000 a year.
To find out what state pension you could be entitled to and when you’re likely to receive it, you should obtain a State pension forecast. These can be obtained online at https://www.gov.uk/check-state-pension.
Also see whether there is anything you can do to boost this, such as making extra contributions.
5. Take independent financial advice
Retirement planning can be complex, and getting it wrong could have a huge impact on your standard of living in the future, so it’s important to make the right decisions to achieve your retirement goals.
If you’re not entirely sure what you’re doing, then you should take independent financial advice and contact us now on 01428 909266 or at firstname.lastname@example.org for an initial no obligation consultation at our cost.
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. Past performance is not a reliable indicator of future performance.
It’s an anxious and upsetting time for everyone as the coronavirus pandemic takes hold, and whilst the primary concern is health, our financial wellbeing is also important.
Since the coronavirus outbreak, global stock markets have fallen considerably and based on the current news flow, it seems that we could experience market uncertainty and volatility for some time to come. You may therefore be wondering what actions or decisions, if any, that you should be taking with regards to pension and investments.
Markets move up and down all the time and if you have an investment but don’t need the monies in the short term, then you’re probably going to be ok as in time, it’s likely that markets will recover. The same applies if you are currently paying into a pension and have several years before your planning to retire.
If you’re close to or considering retirement, you may want to check what type of funds your pension is invested in. Lower risk funds which invest in Cash, Gilts or Bonds will normally help to protect your capital whereas if your pension is invested mostly in shares, then unfortunately you will have taken a hit and depending on when you are planning to retire, you may now have to consider taking a lower income or retiring later.
Psychologists have long recommended managing stress and anxiety by determining what you can control, thinking positively and making a plan. The best advice is not to panic, but to take a deep breath and keep to your long-term investment strategy. However, in order to help people through these unique times, I am happy to offer a free, no obligation 20-minute telephone consultation to anyone who is concerned about their pensions & investments and would like to discuss these with me. Please contact me on 01428 909266 or at email@example.com to arrange a convenient time for me to call you.
The end of the tax year is fast approaching, so now is a great time to talk to us about making the most of tax efficient opportunities. The 2019/20 tax year ends on 5 April 2020, with the new tax year beginning on 6 April. These are important dates for financial planning – so it’s important you don’t miss the chance to undertake a financial health check, fine tune your tax planning and ensure that you make the most of your valuable tax allowances.
Here’s my top tips to help you make the most of your money.
Invest in an ISA
ISA’s are one of the simplest ways to save and invest. Investments in an ISA are free from UK income tax and capital gains tax and since their launch, they have become more and more attractive. Today investors can shelter up to £20,000 from the taxman in an ISA each tax year, meaning that couples can contribute £40,000 between them into ISA’s.
Don’t forget, the ISA allowance for a particular tax year is lost if not used – and there’s no way of carrying it over.
Make a pension contribution
A pension is one of the most tax-efficient ways to save for retirement as pensions can grow free of UK capital gains and UK income tax.
Money held in a pension is locked away for retirement. You can normally start making withdrawals from age 55 (57 from 2028), usually up to 25% tax free and the rest taxed as income.
Pensions are more attractive than ever as you now have the flexibility to make unlimited withdrawals. Anything you don’t withdraw can be passed on to your family, sometimes without any tax.
When an investor under 75 adds money to a pension, they automatically receive a boost from the government, which pays 20%. To have £10,000 in your pension, you only need to pay £8,000.
In addition, higher-rate taxpayers can then claim back up to an extra 20% via their tax return. So, £10,000 in a pension could effectively cost as little as £6,000. Top-rate taxpayers can claim back more: up to an extra 25%, reducing the effective cost of the £10,000 contribution to as little as £5,500. Please note that you must pay enough tax at the higher/top rate to be able to claim back the full amount.
Even if you're not a taxpayer – eg, you don't earn enough to pay income tax – but are contributing to a pension, you'll still have the tax saving added to your contributions up to a certain amount. You'll be given an extra £20 for every £80 you pay into a pension up until you've contributed £2,880. This means the Government tops up your pension to £3,600.
Use your capital gains tax allowance
The capital gains tax allowance in 2019-20 is £12,000. This is the amount of profit you can make from an asset this tax year before any tax is payable.
If your assets are owned jointly with another person, you can use both of your allowances, which can effectively double the amount you can make before CGT is due. You could also gift assets to a spouse or civil partner without any CGT being charged, which then allows them to make the most of their CGT allowance.
As with your ISA allowance, if you don't make full use of your CGT allowance in a given tax year, you aren't allowed to carry it forward to the next.
Make use of the marriage allowance
The marriage allowance is a government scheme designed to give married couples income tax relief. Essentially, you’re able to transfer some of your tax-free allowance to your spouse if you earn less than the current personal allowance – and as long as they are a basic rate taxpayer. In doing this, they can reduce their tax bill by up to £250 over the year.
This can be a great option for people on maternity leave, stay-at-home parents, retired, self-employed and unemployed people. The best way to apply for the marriage allowance is online at https://www.gov.uk/apply-marriage-allowance
If you would like to review your finances to ensure that you are making the most of your valuable tax allowances, please do not hesitate to contact us for an initial no obligation consultation at our cost.
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. Please note though that the levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
The Financial Conduct Authority does not regulate tax advice.