Pensions have undergone a number of changes over the last 15 years. Different legislations have been introduced to help the consumer. There include; Pension A-day, Workplace pensions and most recently, Pensions Freedom.
Whilst pensions have some distinct benefits, there is much confusion that surrounds pension investment. Whether you’re looking for investment advice, amalgamating your pensions or finding out what your current provision will give you in retirement, CB Financial can review all of your Personal Pension benefits and make recommendations to meet your needs.
What are the advantages of contributing to Personal Pension scheme?
- Cannot access money until 55 at the earliest (going up to 57 from 2028). This may not seem like a benefit to some. But the saying goes ‘If you could access it, you probably would.’ So it’s good that it locks your money away for a period of time. On the flip side of the coin — Should you have built up a large enough pot by age 55, then you can access your funds prior to the state retirement age.
- The company will contribute. You won’t get the money any other way.
- Tax benefits on contributions – individuals able to contribute to their pension in two ways:
- Relief at source method – Employee make their contributions after they have been taxed via their PAYE. And then basic rate tax relief is paid into your pension at the pension providers end. Higher rate tax payers can reclaim the additional rate via their self assessment or by contacting the revenue seperately.
- Salary Sacrifice (also known as salary exchange) – Employees sacrifice part of their salary to be paid into their pensions before tax. For technical purposes, these become a company contribution because the company makes these contributions direct. Companies do not have to pay National Insurance (NI) on the amount their employees sacrifice so some elect to pay part, or all of this saving into their pension to give the contributions an uplift.
- Pensions grow in a tax free environment.
- When you retire, you will be able to get 25% of the fund as a tax free lump sum. The rest of the fund is typically used to provide an income for the rest of your days in retirement.
- There are distinct death benefits attached to pension schemes and these can be used in conjunction with your estate planning.
Key Personal Pension Scheme product considerations
Choosing a Pension Scheme for your employees is perhaps one of the most important decisions you will make. Here are some key considerations for you when making a decision:
- What are the range of funds available?
- Is the pension portable (i.e. can you easily transfer the pension should you wish?)
- What is your attitude to risk?
- What are your current provisions?
- Do you wish to use the pension to invest in alternative investments such as commercial property.
- Can you invest directly in shares should you wish?
- What is the financial strength of the provider? These will typically be rate by either standards and poors or moodys.
- What are the charges and are they clear?
- How good is the online functionality. All pension providers now provide an online facility to view your pension, however, they vary in terms of the tools available. A good guide is to find a personal pension that have the following facilities:
- View your pension online,
- Unlimited switches within a year
CB Financial will review all parts of your pension planning and ensure your provision is in the best possible shape for the future. Contact us today for an initial consultation.