In order to receive a generous income when you retire, efficient pension planning is extremely important. Pensions have very generous tax breaks. For every £80 you pay in, the revenue will pay in £20, rounding up your saving to £100. This is equivalent to a rate of return on an investment of 25%.
If you are a higher rate or additional rate taxpayer you can claim a further amount on top at your highest rate of tax. Furthermore your money grows largely tax free and when you get to retirement you can take a quarter of it back as a tax-free lump sum.
If you die before retirement the fund is paid out to your next of kin as a tax-free lump sum (unlike money saved in ISAs, for example, which will fall into your estate for inheritance tax purposes).
A private pension scheme can be set up to provide a pension from any age after 55. This can be very advantageous for those that wish to reduce their workload when getting close to the normal retirement age for their own occupation. If you draw on an occupational pension scheme earlier than the normal retirement age, you could be penalised heavily, however by effecting a private pension policy and drawing down this private pension at the early stage, you will be free to reduce your hours without affecting your occupational scheme benefits.
The other advantage of a private pension plan is that you will have access to thousands of different funds based on your attitude to risk which will allow you take different levels of risk on this proportion of your retirement planning which will provide you with the potential of greater growth.
For a quotation please don’t hesitate to Contact Us for a no obligation initial consultation over email or telephone.