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reality for most of us when we retire, even if we are members
of an occupational pension scheme, is that we will take a
minimum of a one-third cut in our gross pay. For the self-employed
this could be even greater. The problem arises because more
people are starting work later and stopping earlier. In addition,
we increasingly have to fund most, if not all, of our own
pension provision. |
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If you are in your 40s or
50s and are worried about not having sufficient retirement provision,
there is no need to panic. We can help you make up at least some
of the lost ground - but it does mean that you can’t afford
to lose any more time.
Tax efficiency
Although not the only method, the most tax-efficient vehicles
to save for retirement are almost certainly pension schemes. They
attract tax relief at your highest rate(s) and pension funds grow
in a tax- favoured environment.
In addition to the basic personal and occupational pension schemes,
there is a wide range of other private pension options available.
Different types of scheme obviously suit different types of investor.
There are various ways to boost your pension income, increase
investment flexibility and tailor your pension provision to fit
your employment status. So where do you start? Take a look at
some of the options available to you.
AVCs
and FSAVCs
Anyone in an occupational pension scheme can contribute up to
15% of his or her taxable income to their pension, but few schemes
take anything like this much from employees. For occupational
pension scheme members, additional voluntary contributions (AVCs)
are the main pension top-up option. AVCs are individual pension
contracts, usually run by an insurance company on behalf of the
employer.
Free-standing AVCs (FSAVCs) are available for members of occupational
pension schemes from pension providers independently of their
employer; however, they are not available for controlling directors.
FSAVCs are typically more expensive than AVCs, but for some investors
FSAVCs could be appropriate.
Self-Invested Personal Pension (SIPP)
SIPPs give savers, who are self-employed or employees who are
not members of an employer’s occupational pension scheme,
the opportunity of incorporating funds managed by different investment
managers within one pension portfolio. This diversity is particularly
attractive if you have a large fund and are considering using
Pension Fund Withdrawal products after retirement.
Small Self-Administered Pension Scheme (SSAS)
A SSAS is an occupational pension scheme that is extremely popular
with the directors of director-controlled companies as it permits
scheme investments linked to the employer.
They are occupational schemes, but escape many of the investment
restrictions of more conventional arrangements. In particular,
a high degree of self-investment is permitted.
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are many different methods for building a bigger retirement
income and this is certainly one of the most challenging areas
of financial planning. We can assist you through the pensions
maze - please e-mail or contact us for further information.
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The
Financial Services Authority does not regulate taxation and trust
advice, and some aspects of protection. The past is not necessarily
a guide to future performance. Levels and bases of, and reliefs
from, taxation are subject to change. These investments are intended
as long-term investments.
Article date 03/04 |
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