Pensions
59% don’t know what happens to their pension when they die
It can be an uncomfortable topic to think about, but it’s only by making clear plans that you can be sure the right people will benefit after you’re gone.
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It’s time to get smart about pension planning
Intelligent pension planning will help you to live the retirement you want and deserve. With retirement often lasting 25 years or more, it is vital to be prepared and build up a retirement income that provides the standard of living you require in the long term. Pensions are a tax-efficient savings vehicle designed to provide a regular income in retirement – when you choose the right plan, the benefits can be immeasurable.
Intelligent Pension Planning
Intelligent pension planning will help you to live the retirement you want and deserve. With retirement often lasting 25 years or more, it is vital to be prepared and build up a retirement income that provides the standard of living you require in the long term. Pensions are a tax-efficient savings vehicle designed to provide a regular income in retirement – when you choose the right plan, the benefits can be immeasurable.
The State Pension
If you are working and paying National Insurance contributions, you will be eligible for a State Pension which currently comes into payment from age 66 but this is being increased to 67 from 2026. However, many people find that the state pension is insufficient to accommodate the standard of living they require when they retire.
If your employer offers a pension scheme, this provides a good additional source of income, although we would advise undertaking regular reviews with an expert professional to ensure your funds stay on track to meet your retirement goals.
For those who have to make their own provision, we recommend seeking professional advice to discover the most beneficial options.
How we can help you
With our expertise, we can help you consider the cost of retirement and assess your position before it is too late to make a difference. Our expert pensions specialists will:
Determine the level of pension your current arrangements could provide;
Offer recommendations on how to best meet your expectations;
Provide access to a range of pension contracts available in the open market and the best deals;
Recommend pension contracts that are the most suitable for you depending on your current situation;
Review the contribution level, investment performance and overall performance of any existing pension plans you might have and make suggestions for improvement;
Consider your history and any preserved pension benefits you might have to make an informed decision about the best pensions route for you to take.
Self Invested Pension Schemes
SIPPs are an alternative form of personal pension plan specifically structured to allow greater flexibility in investment choice. They are a popular choice for both high-net-worth individuals with a good understanding of market-linked investment and professionals who use their SIPP to buy commercial property for use as office premises. The key benefits of SIPPs:
Allow clients to manage their own investments, either by self-selection or on an advisory basis (with the appointment of a fund manager or stockbroker);
Allow the individual to invest directly in stocks and shares rather than using a collective investment fund;
Offer the opportunity to purchase land for commercial development and commercial property (business premises);
After purchasing a commercial property this can be leased to a non-connected party or your own business and any rent would be paid into your SIPP.
SIPPs represent a very attractive financial option but terms and conditions vary between individual providers so it’s important to make sure the process is completed correctly. Our expert team will oversee the procedure and help you gain the most from your chosen plan.
DISCLAIMER SSASs are not regulated by the Financial Conduct Authority but they are regulated by The Pensions Regulator. Please note that the information contained in this communication has been based on our understanding of the legislation and HMRC guidance at the time it was prepared, and this is subject to change.
Past performance should not be seen as an indication of future investment performance, the value of investments can fall as well as rise. None of this should be considered to be financial advice and we strongly recommend that you obtain advice from a regulated financial adviser that is specific to your personal circumstances before taking any action on any of the matters covered in this communication / website.
Post Retirement Planning
Post-retirement planning is a key component of a healthy financial portfolio, and the market has changed significantly in recent years following the introduction of Pensions Freedoms. This means that consumers can now enjoy access to a more flexible and varied range of options.
Our specialists at Vintage Wealth Management will help you to navigate this minefield with informed guidance on all aspects of post-retirement planning. We offer advice on how to invest wisely in order to live your chosen retirement lifestyle, manage risk and make the most of your income. After all, the last thing you need when you’ve worked hard for decades is to scrimp and save throughout the post-retirement years.
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When you retire, and your pension matures – or if you have taken your pension benefits early – you will need to decide how best to utilise your pension fund. One possibility is to opt for an annuity.
The EssentialsProvides a regular income in exchange for the proceeds of a maturing pension fund.
You can take up to 25% of the pension fund in a tax-free lump sum (the rest must be converted into an annuity).
Pays out the income until you die.
The amount the annuity pays out depends on the size of the pension fund, the amount of tax-free cash you take and interest rates, among other things.
Our advisers will ask some key questions to determine achievable income levels with your annuity and the most appropriate choice for your situation to consider your age, health and other factors. This may depend on whether you are looking for a fixed income or income that rises every year, and whether you are in ill-health (in which case an alternative option may be more suitable).
Modern Alternatives
There have been a number of retirement planning options that have emerged more prominently over recent years, including Flexi-Access Drawdown and Uncrystallised Funds Pension Lump Sum (UFPLS). It’s also important for savvy retirement planners to consider the benefits of phased retirement. -
This type of drawdown pension allows you to place your pension funds in a drawdown plan. After the age of 55, you can withdraw as much (or as little) as you want over any period.
The EssentialsUp to 25% of the fund can be taken as a tax-free lump sum when it is placed in drawdown
Any income will be taxed as pension income
You have the option to make further pension contributions, but certain circumstances may warrant a reduced annual allowance for future contributions to defined contribution plans (the Money Purchase Annual Allowance)
This option is popular for its great level of flexibility where you have full control over your own strategy, including any underlying investments, to provide a sustainable income throughout your retirement.Drawdown also gives you the freedom to leave your pension savings to others as part of your estate planning process. You also have the possibility of taking the remaining value at any time and purchasing an annuity. Our experts will offer insight in the terms and conditions of this type of drawdown plan, including the tax situation, the importance of annual reviews, when and if you should purchase an annuity and what happens to your funds in the event of your death. We will also help you to determine the level of risk you are willing to take and the level of flexibility you would like with your post-retirement options, allowing us to identify and provide the most appropriate and cost-effective solutions.
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This option allows you to withdraw some or all of your uncrystallised pension fund as lump sums without the need to move the funds into a drawdown plan or purchase an annuity.
The Essentials
25% of the fund may be taken tax-free (or 25% of each payment of UFPLS if less than the total fund is withdrawn) with the balance of 75% as taxable income. You also have the possibility of taking any remaining funds at any time and entering them into Flexi-Access Drawdown or purchasing an annuity.
Different pensions offer different levels of flexibility with regards to a UFPLS. That is why it’s important to undertake a full professional analysis and identify the most viable course of action. An expert will also be able to ascertain whether you are eligible for a UFPLS with potential considerations including your age, health, and the value of your remaining lifetime allowance.
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Should you wish to avoid taking all the benefits from your personal pension in one go, Phased Retirement offers a process that ‘crystallises’ your pension fund in stages. This can be done using annuities (Lifetime, Investment Linked or Fixed Term) or your drawdown pension by establishing a series of small income streams every year.
The Essentials
Uses a part of the accumulated pension fund each year, in particular, the tax-free cash amounts, for income purposes (this may create a highly tax-efficient income stream);
Remaining fund continues to be invested under pre-retirement rules for death benefits, which are more tax-efficient than post-crystallisation rules;
Conducted through sophisticated encashment processes or by breaking down the pension fund into a number of segments
This process continues until your entire pension fund has been crystallised, and you may continue to make contributions to your plan to build up future pension income during this period.
Personal Pension Schemes
If you’re relying on your state pension to support the post-retirement lifestyle you’ve always dreamed of, then it may be time for a review. With the current state pension set at just £164.35 per week* (as at the 2018/19 tax year), this is unlikely to accommodate a retirement that fulfils all your wants and needs. At Vintage Wealth Management, we offer Personal Pensions to clients wishing to improve their post-retirement income and quality of life.
Personal Pensions
A Personal Pension provides you with a tax-efficient savings vehicle allowing you to accrue a pool of money to be used as you wish when you come to retire.
Available to UK residents under the age of 75. Note that you can still hold a pension over 75 but can no longer make new personal contributions (some schemes will accept company contributions for individuals over 75).
The policyholder contributes to the plan and funds are invested. Note that employers can also contribute and not just the policy holder.
The amount payable on retirement is dependent on how much has been paid into the plan, investment fund performance and the annuity rate on the date of retirement.
Think you might need a SSAS?
Check if a SSAS might be more suitable
A SSAS is a specific type of occupational pension scheme designed to give members the maximum possible control over their pension scheme and its investments. It must be set up by a company (the ‘sponsoring employer’) and is particularly suitable for directors of private companies as these individuals also act as the scheme trustees. This allows directors to retain full control over investment decisions and, if they wish, to use their pension fund to make a loanback to the business and/or invest in commercial property that can be let to the company. Vintage SSAS Services specialises in providing professional support services to small self-administered schemes (SSASs). We have a clear and focused vision - to offer our clients an outstanding, personal and fully comprehensive SSAS service.