Most people need to plan for their retirement. General improvements in the standard of living over the years, combined with advances in medicine and medical science, means that people are living longer and healthier lives. It is important therefore to consider how and when to save for retirement and how long to continue working.
A pension plan is one of the most tax-efficient ways to save money for retirement. You can receive tax relief on the money you save in a pension, and the pension fund is tax-efficient. With prudent planning, there can also be tax advantages when you come to draw your pension benefits.
It is rarely too late to start the planning process and certainly never too early - you can even start pensions for new born children!
Pensions can be confusing and it can be difficult to know where to begin, especially when there appears to be an overwhelming variety of pensions, pension providers, pension funds and “bolt on” options to choose from. With a bit of planning, you can do a lot to help yourself get ready for retirement. Fairly small changes now can make a big difference to your life in the future.
Callaway Sykes Associates Limited (CSAL) can discuss the options with you. We can formulate and agree a plan going forward and if required review the plan at various points along the way. When the time comes to start drawing your pension we can guide you through the retirement options available to you at that time.
Individual Pensions, covered by similar legislation, with varying levels of flexibility and cost:
1. Stakeholder Pensions
Introduced by the Government to provide a good value pension with a clear and simple charging structure. A basic range of investment funds (usually 10 – 20) and accessible by the majority of the population (anyone under age 75); possibly for those just starting to save into a pension, or who require minimal investment flexibility and good value.
2. Personal Pensions
Similar to Stakeholder Pensions, usually with a greater choice of pension funds (20 – 80) and often equal or better value. This is currently the “mainstream” individual pension plan, commonly used by employers to provide company pensions. Older personal pensions did not offer the same value as personal pensions today, the costs of which are much more visible and have been driven down by the introduction of Stakeholder Pensions. These offer a good balance of investment flexibility and value.
3. Hybrid Self Invested Pensions and
Pension “Wrappers”
Offering a significant increase in fund choice (80 – 1,000+ funds) with greater flexibility than a personal pension. These pensions are relatively new and usually provide good value for pension funds in excess of £50,000. They can offer direct equity holdings and cash bank accounts. Usually offering more flexible retirement options – other than the usual annuity purchase.
4. Fully Self Invested Personal Pensions (SIPPs)
These offer the ultimate in investment flexibility. Purchase any share or fund quoted on any recognised exchange in the world, a commercial property or an offshore bank account. Appoint your own stockbroker / discretionary fund manager or manage the pension fund yourself. Often regarded as expensive, “risky” and new, in fact SIPPs have been around since the mid 1990’s and can provide the best value and can be as low, if not lower risk than any other pension funds. Usually suitable for those who would like the ultimate investment flexibility that current legislation will allow, wish to appoint their own fund manager, have large sums to invest or require a very low risk profile that a pension cash fund generally cannot provide.
Company Pensions, usually a collective of personal pensions
Callaway Sykes advise companies on pensions and pension schemes. Older style “legacy” pension schemes can be inflexible and expensive. We can analyse what is in place and make suitable alternative recommendations.
We can also advise companies on new “multiple pension schemes” where the employer wishes to use only one pension provider but have varying levels of investment control or flexibility. Employees only requiring a basic value pension can be set up together with "wrapper" pensions and SIPPs all within the same pension provider therefore keeping payroll and human resource functions simple and straight forward.
Please contact us on 01245 265 881 to discuss these matters further and to arrange a full business planning strategy review
