Pensions & Retirement Planning

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Legal entity that benefits from growth without being taxed. It is arguably the most important product for those looking to plan for their retirement.

The value of pensions and the income they produce can fall as well as rise, you may get back less than you invested.

Here is a short introductory video where I talk about ‘getting to know your pension’:

As a financial adviser and financial risk manager, I take risk seriously. Whether it be, market risk, credit risk or currency risk, all are as equally important as the next and need to be managed carefully.

If you have a genuine and specific concern about your health you see a doctor, preferably one with the right qualifications, a specialist; The better the doctor is in their specialist field, the better chance of getting good treatment and therefore a positive outcome is more probable.

If you want to protect and grow your money you see a financial adviser, preferably one with the right qualifications and experience, someone who has worked in the financial markets and preferably someone who is adept at managing financial risk: the better the financial adviser the higher the chance of getting good advice and the more probable a positive outcome for your money.

Why then do many of us engage with the wrong advisers? And why do many of us leave our retirement planning to chance and only engage with the process just as we are about to retire?

Pensions are one of the most important financial assets in our lives and it is key to have an expert work with you throughout your lifelong financial planning process. If you do this you are much more likely to see a positive outcome and one which you are happy with.

Here are some simple questions and statements to consider when thinking about retirement planning and your pension:

• The earlier you start saving for retirement the better off you will be in retirement.
• Have you really considered how much money you need to fund your retirement?
• Annual Management Charges (AMC) affect the performance of your pension materially: What is the Total Expense Ratio (TER) on your pension?
• Do you know how trading costs affect your pension?
• How will the Chancellor’s proposed pension legislation affect your money?
• Annuities rates are not attractive: Take advice before you buy.
• If you have a pension, do you know what you are invested in and more importantly perhaps, why?
• Can you switch funds easily and without penalty charges if you need to?
• Is your pension being risk managed?
• Do you receive regular performance reporting? If not, why not?
• Is your financial adviser proactive in providing you with market, economic, geo political, regulatory and legislative updates? More importantly though, how does this fast changing backdrop affect your investment?

Perhaps the most important advice I give to my clients is to plan carefully and do not leave things to chance.

For more information please visit my vimeo channel

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• Home
• About Me
• About You Getting Off to a Good Start
• Increasing Responsibilities
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• Savings and Investments
• Mortgages
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• Business Planning
• Pensions and Retirement Planning
• Estate Planning

These are pension schemes set-up purely for the benefit of a company management and shareholders. There are many benefits to setting up a Directors pension scheme.

The value of pensions and the income they produce can fall as well as rise, you may get back less than you invested.

Tax treatment varies according to individual circumstances and is subject to change.

What is a SIPP?

A SIPP (a Self Invested Personal Pension scheme) is typically a pension product that self-investors will use on a provider’s platform, in order to self-manage funds. A SIPP will normally allow you to invest in a wider range of assets than a personal or occupational pension will. This also includes commercial property.

Historically SIPPs were more expensive to run, because they had more whistles and bells. In recent years due to advances in software and technology they have been made widely available to retail investors. However, the trade off with this streamlined product can be that some of the SIPPs functionality has been watered down.

Benefits of using a SIPP

• A potentially a wider range of investments, which can be appealing to enthusiastic self-investors.
• As with any other pension, the Member may also take a maximum Tax Free Cash Lump Sum of 25% of the fund value. These days, most SIPPs should facilitate Flexi-access drawdown, but, it is important to ask the provider before opening up & contributing to a scheme.
• In addition to quoted equities, gilts, collective investments (OEICs, Unit Trusts, Investment Trusts, etc) and cash deposits, authorized investments include Land and Commercial Property, or even single stocks.
• A SIPP can be self-serviced or serviced by a regulated financial advisor.

Disadvantages of using a SIPP

• Self investment can be risky.
• Although this product can be self-administered, it is likely that advice will be required. Especially if incorporating commercial property into the scheme.
• Streamlined SIPPs may not have the intended functionality, it is important to ask the right questions, before going down the route of opening up a SIPP.

What is a SSAS?

A SSAS is established with a Trust Deed and Rules where the Directors select the Members, who are usually also the Trustees. You are likely to need Professional Trustee service to help you set up and run the scheme.

The Trust Documentation and the Rules of the Scheme must be in accordance with the requirements of HMRC which registers each Scheme and grants Tax Exempt status.

The Sponsoring Company makes contributions on behalf of the Directors and Members. Employer pension contributions are treated as a trading expense so attract full Corporation Tax Relief.

This means the Sponsoring Company may make contributions when profits and cash flow allow. The contribution should not exceed the Maximum Contribution Annual Allowance in order obtain Tax Relief.

Benefits of the SSAS

Perhaps the greatest benefit to SSAS members is the breadth of investments allowable, and the overall flexibility of these schemes. This can help enhance the retirement benefits for company directors and scheme members.

• In addition to quoted equities, gilts, collective investments (OEICs, Unit Trusts, Investment Trusts etc) and cash deposits, authorized investments also include Land and Commercial Property. These can be leased back to the sponsoring company.
• SSASs can be used to facilitate Management Buy Outs or MBOs.
• The Scheme Trustees may borrow up to 50% of the net asset value of the Scheme.
• The Trustees may also advance a secured loan at a commercial rate of interest to the Sponsoring Employer.
• Most assets and investments within the scheme have no tax liability. For example bank interest and rental income are exempt from tax; also commercial property within the scheme is exempt from Capital Gains Tax on the ultimate sale. However you cannot reclaim tax credits from dividend income.
• From age 55, the Member may commence taking a pension relevant to the value of the scheme investments and assets. The Member may also take a maximum Tax Free Cash Lump Sum of 25% of the fund value.

Disadvantages of SSAS:

• Normally limited to 11 members;
• Establishment and running costs can be higher;
• Investing in property can concentrate risk, and create conflicts if members wish to retire or transfer benefits to another scheme;
• At least one member, more commonly all members, will be trustees and have legal responsibilities for liabilities and running of the pension.

Want further information?

The most important advice I give to my clients is to plan carefully and do not leave things to chance. My job is to help grow and protect your assets by providing the knowhow you need to make informed decisions about your future. I then help you implement the strategy into reality. I will work with you over the long term, helping you to build a successful and robust financial situation.

Not sure what to ask? Call today on 01628 308138

Financial Planning for People & Businesses Across the Thames Valley

Contact Us

Ask a question or make a no obligation enquiry by email

Finance FAQs

A list of clear answers to questions frequently asked by my clients

Finance Jargon

A simple guide to help clarify the confusing terms and financial jargon

The value of investments and the income they produce can fall as well as rise.

60%+ of people who come to me with enquires about pensions are between 45 and 65 years of age.

They are often still working and plan to keep on working until they reach the age of 65 for one reason or another. Because they still have an income they often aren’t keen to crystallise their personal pensions completely as it will be taxed at their tax highest tax band as earned income, nor are people inclined to buy an annuity as rates are poor.

There are options available to people in this situation. It may be that you can take income drawdown (flexible or capped -> phased or un-phased) from your UK registered personal pension or SIPP, although you typically must have a pot of £50k or more to do this.

In essence basic income drawdown enables you to ‘draw’ a slice of your pension each pension year. If you think of your pension as a pie, you can take one slice per year whilst keeping the rest still invested in the markets. You will need to opt for a 25% tax free lump sum (PCLS) at the onset of drawdown in non-phased drawdown should you wish to. Income is taxed through PAYE.

Phased income drawdown is where the ‘slices’ are treated as actual segments of the pension in their own right or lots of mini pensions within one big one. If you opt for ‘phased’ drawdown you can take a PCLS each time you crystallise a ‘slice’.

Annual income is based on 0-120% of GAD (Government Actuarial department) rates, and reviewed every 3 years pre-75 yoa and annually thereafter.

A summary of the pros and cons to a drawdown pension arrangement are as follows:

A drawdown pension can be taken from age 55 and is typically used supplement your income, provide increased flexibility and possible enhanced death benefits for beneficiaries.

In general, Stakeholder pensions don’t offer drawdown and defined contribution pensions vary from scheme to scheme.

• Home
• About Me
• About You Getting Off to a Good Start
• Increasing Responsibilities
• Growing Your Wealth
• Planning a Safe & Secure Retirement
• Enjoying Your Retirement

• Savings and Investments
• Mortgages
• Insurance
• Business Planning
• Pensions and Retirement Planning
• Estate Planning

Government driven legislation. The idea is that by making it mandatory for businesses to have a compliant pension scheme this will in turn help ensure that employees and employers contribute to their pension.

What is Automatic Enrolment?

Automatic Enrolment for businesses came into force in October 2012. It was introduced by Government to help bridge the growing pension deficit and to re-direct some of this material liability away from the state.

All employers, even if they have a group pension scheme already in place and no matter what the company size, now have a legal obligation to offer an Auto Enrolment compliant pension at the staging date.

Employers are responsible for contributing to the Auto-Enrolment compliant scheme in line with the pension regulator’s framework as well as ongoing maintenance of the scheme including, opt-ins, opt-outs and establishing which employees should be auto-enrolled.

If you are an employer and would like help, we can help you with the following:

• Establishing your staging date.
• Reviewing your existing group pension and defining whether it is compliant or whether it can be adapted to be an Auto Enrolment compliant scheme.
• Implement the correct payroll and middleware systems.
• To set-up a suitable scheme which is invested correctly in line with fast moving market conditions.
• To manage the scheme on an ongoing basis to ensure the scheme remains suitable, both at an employer level and employee level.
• Present key-updates to employees about their Auto Enrolment pension scheme.
• And of course, to ensure that your company is ready for Auto Enrolment by your staging date and help ensure that your firm will comply with all of the new regulations.

A summary of our Automatic Enrolment advice service and support can be summarized as follows:

– Level 1. This comprises of a one hour Employer and a one hour Employee presentation and is provided at our own cost, i.e. no charge to you.

– Level 2. This comprises of a more comprehensive package where we will provide documented recommendations for a suitable Automatic Enrolment scheme. It is down to the Employer to implement the advice provided. All advice is fully underwritten by Quilter FS.

– Level 3. This is a full service, from providing documented recommendations to implementing those recommendations. All advice is fully underwritten by Quilter FS.

As with all financial advice, every employer is different and will have different requirements and needs.

If you are a company based in Berkshire, Buckinghamshire or West London and would like to find out more about how Alex can help your business through Auto Enrolment setup and ongoing scheme management, book a meeting or call him on 01628 308 138 or 01628 566446.

Not sure what to ask? Call today on 01628 308138

Financial Planning for People & Businesses Across the Thames Valley

Contact Us

Ask a question or make a no obligation enquiry by email

Finance FAQs

A list of clear answers to questions frequently asked by my clients

Finance Jargon

A simple guide to help clarify the confusing terms and financial jargon

• Home
• About Me
• About You Getting Off to a Good Start
• Increasing Responsibilities
• Growing Your Wealth
• Planning a Safe & Secure Retirement
• Enjoying Your Retirement

• Savings and Investments
• Mortgages
• Insurance
• Business Planning
• Pensions and Retirement Planning
• Estate Planning

If you are a contractor, setting up a pension is not only important for retirement planning but also to reduce net profits in a business.

The value of pensions and the income they produce can fall as well as rise, you may get back less than you invested.

Tax treatment varies according to individual circumstance and is subject to change.

Here we outline the flexibility that pensions can offer for Limited company contractors and how you can make the most of your annual income and save efficiently for retirement.

Contractor pensions flexibility

As a contractor / consultant through your limited company, a personal pension, SIPP or SSAS can provide you with corporation tax savings. If you make annual lump sum contributions from your Limited company to your pension, you will offset corporation tax by reducing taxable company profits whilst saving for retirement:

• The annual pension allowance stands at £40,000 (for the 2017/18 tax year), so you can invest up to this level each year and benefit from tax relief on your contributions at your highest marginal rate.
• Contractors with a large sum to invest can take advantage of ‘carry forward’ rules for previous tax years and invest up to £160,000 during 2017/18 if need be.
• Dividends are subject to corporation tax as they are paid ‘after corporation tax’.
• Pension contributions are not subject to corporation tax as they are paid before corporation tax is applied.
• Contractors can pass on assets 100% free from inheritance tax to children via a limited company, subject to qualifying criteria, by way of business property relief (BPR).

Act now and reap the benefits later

Most people are not saving sufficiently for their retirement and a large proportion of the workforce now expect to have to work beyond the statutory retirement age to make up for a shortfall in their pension income.

As a contractor / consultant, if you put the right plans in place at a relatively early age you are more likely to retire comfortably at an earlier age and enjoy the tax benefits of running a Limited company and having personal pension.

Perhaps the most important advice I give to my clients is to plan carefully and do not leave things to chance.

If you would like more information on pensions, please visit my video blog .

Not sure what to ask? Call today on 01628 308138

Financial Planning for People & Businesses Across the Thames Valley

Contact Us

Ask a question or make a no obligation enquiry by email

Finance FAQs

A list of clear answers to questions frequently asked by my clients

Finance Jargon

A simple guide to help clarify the confusing terms and financial jargon

Transferring out of a Final Salary scheme is unlikely to be in the best interests of most people.

Back in those days, when Margaret Thatcher was PM, Financial Advisers were in the most salespeople and weren’t regulated the way Advisers are today. It wouldn’t be remiss to say that the industry back then was a bit ‘wild west’ and unfortunately, the industry carries this baggage with it to this day.

Roll forward to 2019, post the 2013 Retail Distribution Review, when minimum standards for advisers were brought in, and the financial advisory industry is a very different place. However, we still hear of scandals and specifically Final Salary Pension scandals. For example, most recently the British Steel debacle, where it was reported that, ‘ambulance chasing’ introducers and people purporting to be advisers were waiting outside British Steel coercing unsuspecting British Steel Employees to transfer their enhanced pensions to iffy schemes and charging ludicrous sums for their services. We all also hear of scandals where people lose their pensions from fraud.

Sadly, there will always be this type of unscrupulous activity in this industry, but I am glad to say it is but a fraction of what it used to be. On the contrary, now the industry is probably overly regulated, but rather that than under regulated and the bad old days ..

Here are some things to consider if you are thinking about transferring your pension:

Do you have other resources for retirement?

This is important because if the advice is indeed to transfer away your final salary pension to a non-final salary pension, you will be exposing your pension to market risk, credit risk, currency risk, etc. IF there is a market correction then you may need to hold off from drawing down on your pension until the market recovers, by way of drawing down on other assets.

Do you need to drawdown on the pension or is it a financial legacy for children?

If you have a large defined benefit (final salary) pension and you have decided that you want to pass this onto loved ones on death, then it could be that a transfer is appropriate. However, if you are planning to drawdown on the pension too then careful management of the pension will be required. You will likely also need to consider estate planning, tax and other financial planning to ensure your wishes are met.

What is your tolerance to ongoing fees?

Transferring a pension away from a final salary wrapper is complex and requires skilled professional advice. This means fees! If you aren’t comfortable with paying fees and having your pension serviced on an ongoing basis, transferring your pension away from that wrapper may not be suitable for you.

Has the value been enhanced and why?

Has your pension CETV been enhanced? We have seen some whopping increases in pension values over the last few years. This is primarily because companies do not want to keep these long-term liabilities in their balance sheets so they will incentivize you to leave the scheme. The people that don’t leave the scheme and stay in a scheme may then be in a good position. This is certainly something to consider.

Are you in good health?

If you transfer your pension in ill health and then subsequently die within two years of the transfer the pension may be subject to IHT irrespective of whether you die pre or post 75 yoa.

Do you have other assets?

If you do not have other material assets in your estate, transferring your pension away from its DB wrapper may not be suitable for you.

Is the pension scheme funded, partially funded or unfunded?

When analysing whether to transfer your pension or not, your adviser will look at whether the scheme is fully funded, partially funded or even unfunded. There is a myth that all final salary pensions are better than non-final salary pensions. Clearly this is not the case, if a scheme is unfunded for example. In this example, how would the scheme then meet its long-term liabilities.

What is your Attitude to Transfer Risk?

For example, how do you feel about not having a set annual income? What will you do if the pension doesn’t last you for life? What is your experience of investing?

What is your Capacity for Loss?

What happens if the markets crash? Do you have enough assets and other resources to weather the storm?

What is your Attitude to Risk?

What kind of an investor are you? If you are risk averse for example, transferring a pension away from its final salary wrapper may not be for you.

Have you considered alternatives?

If you are transferring a pension to pass onto children or loved ones on death, have you considered taking out a whole of life policy instead? Ask your adviser what alternatives there are to transferring away, especially if you are in a good scheme.

If you are thinking about seeking advice regarding your final salary pension choose your adviser carefully… here’s a few things you might want to check with the adviser and on the FCA register:

• Does the adviser have the relevant Final Salary qualifications?
• Is the adviser Chartered? (this means they will need to adhere to strict codes of conduct).
• Is the adviser / firm accessible and local?
• Do the charges for the work seem reasonable?
• Is the adviser a Pension and Investment specialist with appropriate industry experience?
• Have other people had a good experience using the advisers service? Check online reviews and, if necessary, ask to speak to similar clients.

Ultimately, as with most things, it is about using common sense and following your gut, with all the information available to you.

More On Final Salary Pensions