PERSONAL AND WORKPLACE PENSIONS
Why do I need a pension?
When you retire, you’ll need money to live on – enough for the basics and hopefully a bit more to maintain your lifestyle. A pension is usually the most tax-efficient way of saving for your retirement.
Start paying into a pension as early as you can so it has the best opportunity to grow.
Pensions offer extra tax relief
The great benefit of paying into a personal pension is that you receive tax relief on your personal payments. This can really boost your pension pot. For every £80 you pay in, HMRC pays in £20 to your pension.
If you're a higher rate taxpayer, you can claim additional relief through contacting HM Revenue & Customs (HMRC). For every £80 you pay in, HMRC pays in £20 to your pension and reduces the tax you pay overall by another £20.
Remember, the earlier you start, the more payments you'll make to your pension and the more opportunity this money has to grow.
Can I rely on the state?
It’s unlikely. The current standard State Pension is £6,203.60 a year, as of April 2016. Even with top ups, many people struggle to live on the amount they get. With an ageing population, this isn’t likely to improve.
Benefits of a personal pension
Tax
• The Government (HMRC) tops up your payments with tax relief
• From the age of 55, you can usually take up to 25% of your pension as a tax-free lump sum. This age increases to 57 from the year 2028
Note: Any money you then take is liable to Income Tax.
Flexibility
• You choose how much you pay in, subject to HMRC limits. You can start with as little as £16 a month with a stakeholder pension, with HMRC paying £4 tax relief
• You can make changes to your payments, and pay monthly, yearly or make one-off payments
• You'll have a choice of flexible retirement options to suit your circumstances. Recent changes will give people even more flexibility in how to take their money
Access
• Pensions are normally long-term investments. The longer they’re invested for, the more opportunity they have to grow.
Note: You normally won’t be able to access your pension until you're 55. This age increases to 57 from the year 2028.
Invest to suit you
• You can choose where you invest your money to suit your attitude to risk and circumstances
• You can spread your payments across different investments, spreading your risk
Note: Investment value can rise and fall. Growth is not guaranteed, and your investment may be worth less than was paid in.
Laws and tax rules may change in the future. The information here is based on our understanding as of April 2016. Your personal circumstances also have an impact on tax treatment.
The value of any investment can go up or down and may be worth less than was paid in.
Impartial advice of the highest quality
At Independent Financial Solutions, our highly skilled adviser uses state-of-the-art technology, enabling us to meet all of our clients' financial needs, both personally and corporately, and achieve their objectives in the most cost-effective way.
This is important because there are literally thousands of different options available, and our clients want to be certain that any investment, pension, healthcare or insurance recommendations that we present for consideration are the most appropriate to their individual needs. In other words, recommendations that are totally in our clients' interests – not someone else’s.
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