Funding your retirement - Advice Online

Exploring your pension options

Make your retirement a more pleasurable one

It goes without saying that we should all have provision in place for our retirement, but choosing the most appropriate method can leave us with a real headache. The choice of pension schemes available is bewildering. In addition, if you don’t have access to a company pension scheme you also have to consider independent provision through a personal arrangement. We provide a complete unbiased and independent service to help you make a more informed decision.

Funding your retirement
The Inland Revenue limits the amount you can pay into a personal pension in any one tax year. This is calculated as a percentage of your annual net relevant earnings (subject to the earnings cap). If you are an employee, your net relevant earnings are your earned income, while if you are self-employed these are normally your profits less business expenses. As you get older (and therefore nearer to retirement), the percentage increases. Where your earnings have been higher in one of the five previous tax years you may also be able to base your personal pension/stakeholder pension contribution in tax year 2005/06 on those higher earnings. Anyone under the age of 75, who is not a member of an occupational scheme, may contribute up to £3,600 per annum into a personal pension plan without evidence of earnings.

Maximum annual pension contributions (as a percentage of net relevant earnings) subject to the earnings cap of £105,600
Age at the beginning of the tax year	Maximum
35 or less	17.5%
36-45	20%
46-50	25%
51-55	30%
56-60	35%
61-74	40%

Source: Inland Revenue 2005

Where an individual is a member of an occupational scheme and is not otherwise eligible to contribute to a personal pension scheme, he/she, depending on the level of his/her P60 earnings in tax years 2000/01 to 2004/05, may be able to make a concurrent contribution of up to £3,600 to a personal pension/stakeholder scheme in tax year 2005/06.

Retirement is one of the most important events that you will ever plan for, so it really does make sense to take an independent review of your situation. Don’t think that you have plenty of time or just leave it to chance – please e-mail or contact us.

Levels and bases of, and reliefs from, taxation are subject to change.