Savings & Investments

Family playing in the snow after discussing tax planning

New Year’s Tax Planning Opportunities

 560 315 Jess Easby
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Family playing in the snow after discussing tax planningMake full use of your relevant tax planning opportunities

With the tax year end (5 April) on the horizon, taking action now may give you the opportunity to take advantage of any remaining reliefs, allowances and exemptions.

We have provided some key tax and financial planning tips to consider prior to the end of the tax year. Now is also an ideal opportunity to take a wider review of your circumstances and plan for the year ahead.

Check your paye tax code

It’s important to check your tax code. Your tax code is based on the amount of tax you should be paying and the amount you can earn before tax applies. The tax code is the identifier that tells your employer how much tax should be deducted from your salary each time you get paid. If you have multiple employers or pension providers, you may get more than one tax code. If you’re on the wrong one, you could be paying HM Revenue & Customs (HMRC) more than you ought to be. On the other hand, you risk getting penalised if you’re paying too little.

Transfer part of your personal allowance

Married couples and registered civil partners are permitted to share 10% of their personal allowance between them. The unused allowance of one partner can be used by the other, meaning an overall combined tax saving.

The amount you can transfer is £1,260 for 2021/22 and a transfer is not permitted if the recipient partner pays tax at a rate higher than the basic rate of 20% (higher than the intermediate rate of 21% for Scottish taxpayers).

Contribute up to £9,000 into your child’s junior ISA

The fund builds up free of tax on investment income and capital gains until your child reaches age 18, when the funds can either be withdrawn or rolled over into an adult ISA. Relatives and friends can also contribute to your child’s Junior ISA, as long as the £9,000 limit for 2021/22 is not breached.

Tax-free savings and dividend allowances

For 2021/22, savings income of up to £1,000 is exempt for basic rate taxpayers, with a £500 exemption for higher rate taxpayers. The tax-free dividend allowance is £2,000 for all taxpayers. Married couples and registered civil partners could save tax by ensuring that each person has enough of the right type of income to make use of these tax-free allowances.

Individual Savings Account (ISAs)

You can put the entire amount into a Cash ISA, a Stocks & Shares ISA, an Innovative Finance ISA, or any combination of the three (or up to £4,000 out of the overall £20,000 allowance into a lifetime ISA if aged between 18 to 39). Usually when you invest, you have to pay tax on any income or capital gains you earn from your investments. But with an ISA, provided you stick to the rules on how much you can pay in, all capital gains and income made from your investments won’t be taxed. Every tax year you have an ISA allowance, which is currently £20,000 for the 2021/22 tax year.

Utilise any capital loses

If you realise capital gains and losses in the same tax year, the losses are offset against the gains before the capital gains tax exempt amount (£12,300 in 2021/22) is deducted. Capital losses will be wasted if gains would otherwise be covered by your exempt amount. Consider postponing a sale that will generate a loss until the following tax year, or alternatively realising more gains in the current year.

Maximise pension contributions

The annual allowance for 2021/22 is £40,000. To avoid an annual allowance tax charge, the pension contributions made by yourself, and by your employer on your behalf, must be covered by your available annual allowance. If you haven’t used all your allowances in the last three tax years, it might be possible to pay more into your pension plan by ‘carrying forward’ whatever allowance is left to make the most of the tax relief on offer, though bear in mind that your own personal tax-relievable contribution amount is still capped at 100% of your earnings.

However, different rules apply if you’ve already started to take money flexibly out of your pension plan and you’re affected by the Money Purchase Annual Allowance, or if your income when added to your employer’s payments are more than £240,000 and your income less your own contributions is over £200,000.

Pay pension contributions to save NICs

If you pay pension contributions out of your salary, both you and your employer have to pay National Insurance Contributions (NICs) on that salary. When your employer pays a contribution directly into your pension scheme, the employer receives tax relief for the contribution and there are no NICs to pay – a saving for both you and your employer.

You could arrange with your employer to cover the cost of the contributions by foregoing part of your salary or bonus. You must agree in writing to adjust your salary before you become entitled to that salary or bonus and before the revised pension contributions are paid for this arrangement to be tax-effective, although pension contributions are not caught by the clampdown on salary sacrifice arrangements.

Make a Will and review it

If you die without making a Will, your assets will be divided between your relatives according to the intestacy rules. Your surviving spouse or registered civil partner may only receive a portion of your estate, and Inheritance Tax will be due at 40% on anything else above £325,000 (up to £500,000 if the Residence Nil Rate Band is available).

Leave some of your estate to charity

Where you leave at least 10% of your net estate to charities, as well as the gift to charity being free from Inheritance Tax, the Inheritance Tax on your remainder estate is charged at 36% instead of 40%. The exact calculation of your net estate is quite complicated, so it’s important to receive professional advice when drawing up or amending your Will.

Make regular IHT-free gifts

As long as you establish a pattern of gifts that can be shown to be covered by your net income, without reducing either your capital assets or your normal standard of living, these gifts will be free of Inheritance Tax. The recipients of the gifts need not be the same people each year.

Use the IHT marriage exemption

If your son or daughter is about to marry, you and your spouse can each give them £5,000 in consideration of the marriage, and the gift will be free of Inheritance Tax. The marriage exemption can also be combined with your £3,000 a year Inheritance Tax exemption to allow you to make larger exempt gifts. You can make an Inheritance Tax-free gift of £2,500 for a grandchild’s wedding. Registered civil partnerships attract the same exemptions.

Make IHT-free gifts each tax year

These gifts are free of Inheritance Tax and, if you forget to make your £3,000 gift one year, you can catch up in the next tax year by giving a total of £6,000 but you can only carry forward the £3,000 allowance for one tax year and must fully use the current year’s allowance as well. Remember, you and your spouse or registered civil partner can each give £3,000 out of your capital every tax year, in addition to gifts you make out of your regular income.

Do I need personal tax planning advice?

It is crucial that year-end tax planning reviews are undertaken as soon as possible, as you will need time to consider all the options available. Many of the allowances and reliefs cannot be applied retrospectively after 5 April 2022. We can provide a comprehensive review, tailored to your individual needs and circumstances. Don’t delay, please contact us if you require further information.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change. The value of investments and income from them may go down. You may not get back the original amount invested. Past performance is not a reliable indicator of future performance.

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Festive gifts that teach children the value of money

 560 315 Jess Easby
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Why parents should look to Christmas investment gifts instead of toys.

With the festive season approaching, have you thought about gifting your children or grandchildren something different this year? Giving them a good start in life by making investments into their future can make all the difference in today’s more complex world.

Lifetime gifting is not only a good way to set up children for adulthood but is also a way of mitigating any Inheritance Tax concerns. However, what’s clear is that not all saving products for children are made equally. With interest rates at historic lows, if you are looking to put money away for a child to enjoy when they grow up investing is by far the best way to maximise your gift.

Significantly higher returns

Some people remain worried about the volatility of investing but, with an 18-year horizon, putting money to work in the market can give significantly higher returns than products such as Premium Bonds.

One option to consider is a Junior Individual Savings Account (JISA). These were introduced in the UK on 1 April 1999 as a long-term replacement for Child Trust Funds (CTFs). If a child was born between 2002 and 2011, they might already have a Child Trust Fund, but these can be transferred into a JISA.

Save and invest on behalf of a child

If the CTF is not transferred, when a child reaches 18 they’ll still be able to access the money. Or they can choose to transfer it into a normal Cash ISA. A JISA is a long-term savings account set up by a parent or guardian and lets you save and invest on behalf of a child under 18 without paying tax on income or gains.

With a Junior Stocks & Shares ISA account, you can put your child’s savings into investments like funds, shares and bonds. Any profits you earn by trading investment funds, shares or bonds are free from tax. Investments are riskier than cash but could give your child a bigger profit, and the value of a Junior Stocks & Shares ISA can go down as well as up.

Money in the account belongs to the child, but they can’t withdraw it until they turn 18, apart from in exceptional circumstances. They can start managing their account on their own from age 16.

Financial education from a young age

The Junior ISA limit is £9,000 for the tax year 2021/22. If more than this is put into a Junior ISA, the excess is held in a savings account in trust for the child – it cannot be returned to the donor. Friends and family can also save on behalf of the child as long as the total stays
under the annual limit.

When your child turns 18, their account is automatically rolled over into an adult ISA . They can also choose to take the money out and spend it how they like. It is therefore important to ensure that children are given financial education from a young age so that when they can get their hands on the funds they use them wisely.

Been putting off planning for your child’s future?

Many parents, guardians and grandparents want to help younger members of the family financially – whether to help fund an education, a wedding or a deposit for a first home. If you are asking yourself ‘How can I start saving for my child’s future?’, using a Junior Individual Savings Account could be a good place to start. You don’t need a big lump sum to get started. In fact, contributing regular smaller amounts is a good way to start. To find out more, please speak to us – we look forward to hearing from you.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change. The value of investments and income from them may go down. You may not get back the original amount invested. Past performance is not a reliable indicator of future performance.

Find Your Local Adviser
Scared-of-running-out-of-money-in-retirement

Scared of running out of money in retirement?

 560 315 Jess Easby
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Scared-of-running-out-of-money-in-retirementAre you scared of running out of money in retirement?

It has been well recognised that many are simply not saving enough into their pension pots for retirement. To avoid unwanted stress if you are planning to retire, you need to be absolutely sure your money is going to go the distance. Concerns you may have are:

  • Do I have enough to retire?
  • Will I run out of money, and when?
  • How can I guarantee the kind of retirement lifestyle I want?

Firstly, it is never too early to start saving for your future, and the earlier you start the better.

Pensions have a tremendous compound effect so the basic principle is the more you put in, the more you get out. The way you accumulate your retirement money and how you use it during your retirement will have a big impact on how long it will last – and also the amount of tax you pay.

Here are just some of the steps you can take to improve your pension pot size:

Making the most of pension tax relief

The Government encourages you to save for your retirement by giving you tax relief on pension contributions. This means some of the money that you would have paid in tax on your earnings goes into your pension pot rather than to the government. Tax relief has the effect of reducing your tax bill and/or increasing your pension fund. For a more detailed look at pension tax relief visit https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

Know your state pension

The State Pension is a weekly payment from the Government that you can receive once you reach State Pension age (66). The current state pension amount is £179.60 a week (2021-22), but you may get more or less than this.

To qualify for the State Pension you need a minimum of 10 years of National Insurance contributions. To find out more on how much State Pension you could receive and when visit https://www.gov.uk/check-state-pension

Investing during retirement

When it comes to investing during retirement, it is important not to view your portfolio with an element of finality. Your investment risk profile and strategy will almost certainly need to adjust to look at ways of making your money work as hard as possible, but with a view to generating earnings to boost your retirement income.

This is a time to look at how balanced your investments are and whether you are exposed to more risk than you are comfortable with. It is a time to review all your investments and decide how much you can afford to withdraw each year and whether this balances with your needs.

Let us take the fear out of your retirement planning?

It is always important to think ahead to retirement and not rush into making life-changing financial decisions. We can help you determine which retirement income approaches may be best for you based on your personal needs and goals. If you are scared of running out of money in retirement and would like to talk to us about your retirement requirements, then please get in touch.

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Would you love to retire early?

 560 315 Jess Easby
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Craving a better work/life balance? Wanting to spend more time with family and friends? Yearning to get on with that bucket list that you haven’t quite finished or even started?

You are not alone. The pandemic has many of us look at life in a different manner, having been forced off that daily treadmill and now we just don’t want to get back on.

You may now be one of the many actively seeking early retirement options.

The key is to be in a financial position to enjoy this time of your life, while, making sure you don’t outlive your retirement savings. Whilst creating a retirement plan so you don’t run out of money sounds like an obvious choice, it may not be as straightforward as it sounds. For all you cannot know exactly how much money you will spend when you retire, you can know what your lifestyle costs are now to know if you are financially ready to retire.

Equally, with living costs rising and interest rates fluctuating, you may also need to factor in or consider generating additional income, to boost your state and private pensions.

Grandparents with family on beach after thinking they would love to retire earlyWould you love to retire early

The key imperative is to create a plan and to ask a qualified Financial Adviser to develop a living cash flow model for you, so you can see exactly the impact of income vs expenditure, where the income gaps are and put an action plan in place together.

Here at Ellis Bates, we will discuss the best ways to bring your early retirement plans to life. We want you to be able to enjoy the things in life that mean the most to you and your family.

So, we are ready when you are, to listen to you and help you plan.

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Make your money work harder

 569 315 Jess Easby
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Has lockdown lifted your savings?

A lot of people have shifted the way they think about life due to Covid-19. Families have focused on staying healthy and having a healthier work/life balance. These are now top of their priorities to protect themselves and their loved ones.

Some have saved that little bit extra during lockdown by not going out or on holiday. Investing your money wisely could be an option for you to consider. Investments could grow your capital and income and generate another income stream.

There is a lot of nervousness around finance and investments as a result of Covid-19. Key questions you may be considering are:

  • How will the markets perform with interest rate fluctuations?
  • How will I gain a good return?
  • How will we protect ourselves and our families against an uncertain future?

A regulated Financial Adviser can help answer these questions and guide you on a suitable investment strategy, based on your individual situation.

You work hard for your money and your money should work hard for you. 

Ellis Bates has a holistic view of financial planning. We understand that no two people have identical financial circumstances. We create a tailored plan that meets your individual needs and investment objectives. Your goal could be to make your cash work harder, fund education fees, contribute to a wedding, buy a new property or save for retirement.

If you like the idea of investing but are unsure where to start, get in touch for a free initial consultation today.

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Evolution of ESG Investing

 560 315 Jess Easby
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Changing Face of Investor Ethics and Behaviours

The coronavirus (COVID-19) pandemic has prompted an evolution of ESG investing. It has caused the desire to move into ethical and sustainable investing for more than half (51%) of advised UK adults, according a new report[1]. And while the trend is common across the generations, it’s Millennials who are leading the charge.

The report, which looks at intergenerational planning and wealth transfer between advised families amid the financial volatility and insecurity of the pandemic, found that 61% now care more about the environment and the planet than they did before the pandemic.

Financial Returns with a Positive Contribution

Investing sustainably means putting your money to work on issues ranging from adapting to and mitigating climate change, and improving working conditions and diversity, to tackling inequality. More and more, investors want to invest sustainably and they want to combine investing for a financial return with a positive contribution to the environment, society or both.

More than a quarter (26%) of respondents admit they are more concerned than they’ve ever been. One in five (21%) say they are more worried now that they have children and grandchildren.

Appetite for Sustainable Investments

The pandemic has undoubtedly fuelled investor demand for sustainable investing and this is trickling down through the generations – 60% of Millennials, 44% of Gen X and 35% of Baby Boomers confirmed that COVID-19 has increased their appetite for sustainable investments. And many investors go further: 45% confirmed that since the pandemic they now only want to invest in sustainable companies and funds.

Despite the desire for ethical and sustainable investing, more than a third (36%) of UK adults admit they actually have no idea what their current investments – including workplace and private pensions – are invested in, as they have little to no control.

Beginning an ‘Investment Journey’

For many, the crisis has shifted their financial priorities, prompting more to seek professional financial advice. One in two (53%) respondents said they had either already sought advice – or were planning to because of the pandemic. And just over one in five (21%) were seeking advice to begin their ‘investment journey’, potentially fuelled by individuals who had built up savings not having the traditional outlets for spending their income.

With £5.5 trillion in personal wealth due to be passed to the next generation by 2047[2], the role that intergenerational planning advice played prior to the pandemic was already a significant one. Yet the crisis has reframed financial priorities. Not just for those in later life with Inheritance Tax liabilities, but for all generations.

Planet, Environment and Society

Once perhaps viewed as a fad, ESG investing is becoming normalised, making it a fundamental building block within intergenerational financial planning. It also enables parents to leave their children more than just a financial legacy in terms of planet, environment and society.

Two in five advised clients surveyed confirmed they expect to increase the amount they invest in Environmental, Social and Governance (ESG) investments over the next five years.

If you would like to discuss  more on socially responsible investing, please get in touch.

Source data:
[1] Research was carried out by Opinium for Prudential UK & Europe, part of M&G plc, among a UK representative sample of 1,000 advised families. The study was completed in November 2020.
[2] Kings Court Trust’s Inheritance Economy Research Papers

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Building a better world

 560 315 Jess Easby
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Time for pensions to contribute towards building a better world

New landmark report from the United Nations on the state of climate science.

As we have been witnessing in recent years and months, climate changes are occurring in every region and globally. A new landmark report from the United Nations on the state of climate science has highlighted modern society’s continued dependence on fossil fuels, which is warming the world at a pace that is unprecedented in the past 2,000 years. Its effects are already apparent as record droughts, wildfires and floods devastate communities worldwide.

Put simply, net zero refers to the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere. We reach net zero when the amount we add is no more than the amount taken away. The UK became the world’s first major economy to set a target of being net zero by 2050.

Greenhouse Gas

The Intergovernmental Panel on Climate Change report published on 9 August emphasises there is still time to act, but it must happen immediately. Limiting climate change demands strong and sustained reductions in greenhouse gas emissions from human activities such as burning fossil fuels.

One of the main areas where change can make a significant difference to all of our futures is how and where our pension money is invested. But the facts are, if money is invested in a standard, default pension, it could be doing more harm than good.

Climate Change

Your pension is more than just a retirement fund, it can also contribute towards building a better world. However, one in four pension scheme members have never even heard of net zero, while three in ten can’t explain or understand the connection with their pension pots and climate change.

According to new research[1], almost nine in ten Defined Contribution (DC) scheme members were not aware of the importance of having their pension scheme aligned with a net zero goal. But, encouragingly, members were overwhelmingly in favour of their pensions moving towards net zero when the term was explained.

Collective Power

The survey also uncovered that one in four (25%) further three in ten (31%) have heard of it but could not say what it means. In fact, 70% of DC members prefer remaining invested and using their collective power to engage with companies to align their businesses with global climate change efforts, or prepare them to thrive in a low-carbon economy.

Two-thirds (64%) of all members have become more concerned about the impact of human actions on the planet following the COVID-19 crisis. Rather than deprioritising environmental issues in favour of immediate concerns, the pandemic has thrust them into sharper focus as members explicitly linked them with their current situation.

Performance Impact

Millennials are the strongest supporters of engagement, with 79% of them supporting providers’ stewardship activities. Their attitude also helps to explain their change of heart towards outright divestment. While still the most radical cohort of the three generations on this issue, half of Millennial members would consider divesting if it had no performance impact, while only two in five of them would divest no matter what.

Baby Boomers are twice as likely as Millennials to want to keep pensions as diversified as possible, even if that meant investing in fossil fuels, but the proportion has dropped from 30% to 25% over the past 18 months. The research also shows that more than a fifth of ‘Boomers’ (22%) are now happy to divest into a greener pension regardless of performance. This follows increased coverage of climate in the mainstream media and real concern about the impact of climate change on their children and grandchildren.

Younger Views

Millennial men are the most likely to want a net zero pension irrespective of the impact on financial performance. The proportion who feel this way (40%) is double that of the group showing the least interest, female Baby Boomers (20%).

As Baby Boomers move steadily into their retirement years, the balance of power will shift as Gen X starts to hold the largest share of pension assets. Younger views will be an  important factor in shaping the direction of travel over the next ten years. This new cohort can no longer be assumed to be simply chasing maximum financial returns regardless of the impact on the planet.

What good could your money do?

Humanity has its work cut out to create solutions to the many complex problems of the 21st century. We help you assess the risks – and opportunities – posed by companies’ and countries’ performance in critical areas, such as climate change, executive remuneration, and diversity and inclusion. Please speak to us for further information – we look forward to hearing from you.

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Source data: [1] Survey conducted in April 2021, based on a population of 3,056 adults currently contributing to a workplace pension. Legal & General Investment Management published 14 June 2021.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless you have a plan with a protected pension age). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options at retirement.
Women on laptop thinking about retiring from work and not a paycheck

Money’s too tight to mention

 560 315 Jess Easby
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Women on laptop thinking about retiring from work and not a paycheckLooking to retire from work, not a paycheck?

When it comes to retirement insecurity, one concern dominates all others – the fear of running out of money during retirement. And with people living longer than ever before, it’s a very valid concern.

A new report reveals how two-thirds (66%) of adults planning to retire this year risk running out of money[1].

The research found that a 2021 retiree plans to spend, on average, £21,000 a year in retirement – almost £10,000 less than the average UK household income (£29,900)[2].

Just two in five (39%) feel very confident that they’re financially ready to finish working this year, with a third (34%) of women feeling very confident versus two in five (43%) men.

Longer-term financial priorities and plans

Almost half (48%) of those surveyed are planning to reduce their usual spending to support themselves in retirement, while a quarter (27%) will work part-time to help financially. One in five (21%) are planning to sell their home or downsize to fund retirement.

Deciding how and when to retire is one of the biggest life decisions and transitions we make. Longer life expectancy, volatile investment markets and ever-changing regulation can make planning and preparing for retirement feel confusing, not to mention the impact of the coronavirus pandemic on people’s immediate and longer-term financial priorities and plans.

Apprehensions about retiring during a pandemic

Whatever the plan, when it comes to making the decision to retire, most people find it understandably daunting. Even more so if you don’t feel prepared. There are clearly more apprehensions about retiring during a pandemic amongst this year’s retirees. Pensions are without a doubt the most popular option for funding retirement, but it’s important retirees also consider any other savings or assets they can use when deciding whether they can afford to retire or not.

Understanding what money you have for your retirement and how to spend it wisely can be difficult, but that’s where preparation and obtaining professional financial advice can help. Circumstances or priorities may change,  particularly if you’re retiring amidst a global pandemic, but it will be much easier to adapt a plan you already have rather than start from scratch.

Helping you plan to enjoy the future you want

Longer lives, less proactive saving, higher costs of living and a lack of a financial planning are all contributing factors to the risk that many
people may outlive their money in retirement. If you would like to talk to us about your future retirement plan, we can help make sure it’s a resilient one. To find out more, please contact us.

Source data: [1] Consumer research of 2,000 UK adults who were either due to retire in the next 12 months, or had retired in the past 12 months. Research was carried out by Censuswide in February 2021. [2] ONS average household income, UK: financial year 2020
A pension is a long-term investment not normally accessible until age 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options at retirement.
Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means tested benefits and is not suitable for everyone. You should seek advice to understand your options at retirement.
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an older couple on a boat after creating a secure retirement

Plan for a comfortable Retirement

 560 315 Jess Easby
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an older couple on a boat after creating a secure retirementCreating a comfortable, secure retirement takes care and forethought. If you’re 10 to 15 years from retirement, you’re probably starting to think more about how you’ll spend your life after work. You might be contemplating travelling more, dedicating more time to your passions or enjoying more free time with your family.

However, are you concerned that the idea of a financially comfortable retirement is increasingly unattainable? You might have some concerns about your pension savings and whether they’ll provide the income you need. If you haven’t already done so, now is the ideal time to take stock of your current situation and make any necessary alterations to ensure you’re on track. Here are five tips to help you get started.

1. Calculate your expected retirement spending

Everyone has a different idea of the ideal retirement and so will have different spending needs. Looking at your current outgoings is a good place to start. Calculate how much you spend each month on paying down debts, paying bills, essential spending and non-essential spending.

Then, consider what might increase or decrease over your retirement. For example, you may be reaching the end of your mortgage, which will mean your debt payments go down. But you might plan to take up a new hobby, which will mean your non-essential spending goes up.

Remember to factor in any large lump sums you plan to spend, such as helping your children with property deposits or taking a dream holiday.

2. Review your current wealth

You might have accumulated several different workplace pensions with different employers over your lifetime, so you’ll need to total the  savings you have in all of them. Start by contacting previous employers to find out the name of the pension provider. If you don’t have the details of each pension, we can help you trace them.

Remember, it’s not only pension savings that can dictate your retirement spending, but also other sources of income, such as buy-to-let properties or investment portfolios, so be sure to include these too.

3. Maximise your pension savings to help create a secure retirement

If your current pension savings won’t cover your expected retirement spending, you can adjust your current financial arrangements to help you reach your goal.

You may also want to make lump sum payments into your pension. If a lump sum would take you over the £40,000 pension annual allowance, you can use unused annual allowance from up to three previous years.

Your pension annual allowance is the most you can potentially save in your pension pots in a tax year (6 April to 5 April) before you have to pay tax, unless there is carry forward available.

4. Adjust your investment strategy

Your pension savings might currently be invested based on a higher-risk strategy to maximise the potential returns on your investments. But as you approach retirement, you may want to choose a lower-risk strategy with an emphasis on preserving the wealth that you have rather than growing it.

Lower-risk strategies tend to result in fewer losses and slower, but more predictable, growth. That can be preferable when you’re trying to ensure your savings last a lifetime. We can help you establish the right strategy for your risk appetite and goals.

5. Consider a phased retirement

Some people want to stop working as soon as possible, but that’s not the right choice for everyone. They may dream of an early retirement in their mid-50s, but once they leave behind their workplace at such a young age they might not find retirement fulfilling. Also, the amount in their savings or portfolio may not reflect what they’ll need to enjoy the coming years and lifestyle they want.

These days, there is a trend for people increasingly deciding to slowly reduce the hours they work over a few years or to take on a part-time job in the early years of their retirement to keep busy and continue to contribute to a pension. Others may use a lump sum at the start of their retirement to establish a small business. There are many different retirement journeys that might suit your lifestyle and financial goals.

Feeling uncertain about your retirement?

Making all these decisions alone can be stressful, and no one should enter retirement feeling uncertain that their savings are sufficient to last a lifetime. Seeking professional financial advice can give you peace of mind so that you can relax and enjoy this next life stage. Speak to us for more information or to discuss your requirements in creating a secure retirement.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek advice to understand your options at retirement.
Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain meanstested benefits and is not suitable for everyone. You should seek advice to understand your options at retirement.
Find Your Local Adviser
a lady looking out of a window thinking about pension freedoms

Pension freedoms

 560 315 Jess Easby
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a lady looking out of a window thinking about pension freedomsPension Freedoms – Looking for a wider choice of investment options?

Saving for your retirement is one of the longest and biggest financial commitments you will ever make. Imagine you’re retiring today. Have you thought about how you’re going to financially support yourself (and potentially your family too) with your current pension savings? The pension freedoms introduced in 2015 provide even more of an incentive to look again at your retirement savings.

If appropriate to your particular situation, one option to consider is a Self-Invested Personal Pension (SIPP), especially if you’re looking for a wider choice of investment options. It’s an option for people who are more comfortable with investment risk and who have more time to regularly review their pension investments to make sure they continue to meet their needs.

Range and flexibility of investment

First introduced in 1989, this structure provides a range and flexibility of investment that makes a SIPP one of the most flexible methods of saving for retirement.

UK residents can invest money into a SIPP up until the age of 75, and start withdrawing money from as early as 55 (57 from 6 April 2028). Tax relief is available on personal contributions up to £3,600 or 100% of relevant UK earnings (whichever is greater), with tax-efficiency also subject to the pension annual allowance, which is £40,000 for most people and applies to contributions from all sources, including employer. Any unused allowance from previous years may mean more than £40,000 can be contributed tax-efficiently.

Saving for a child or grandchild

Parents can also open a Junior SIPP for their children. It may seem a little premature to start putting money into a SIPP for your child or grandchild at birth, but the tax relief that is available on the contributions makes this a particularly attractive way to save for your child’s future. The money is tied up until they reach retirement age, so this money will not be accessed any time soon.

As with all Defined Contribution pension schemes, the amount that you will have available when you retire depends on the contributions that you (and any employers) have made and how your investments perform over time.

Bring everything together in one place

If you’ve got several pensions, it could make sense to bring everything together in one place. Even if the amounts are small, it all adds up. You can transfer most types of pensions to a SIPP and combine them, letting you manage your pension pot in one place. But SIPPs are not suitable for every investor and other types of pensions may be more appropriate. Once in a SIPP wrapper, your savings will grow free from UK Income Tax and Capital Gains Tax.

Just starting your pension journey?

Investing your retirement savings in a SIPP may not be for everyone. If you are not sure which type of pension scheme is best for you, it’s essential you obtain professional financial advice to review your options. To find out more about pension freedoms and to discuss your options – please contact us.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options at retirement.
Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain meanstested benefits and is not suitable for everyone. You should seek advice to understand your options at retirement.
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