This is the biggest financial decision you are likely to make and we are here to guide you through all stages of this journey
Accumulation
Pensions have always been one of the most tax efficient ways of saving and the earlier you start a pension the better.
Over a forty-year period, the compounding of your investment can make a significant difference to your eventual retirement pot. Tax relief is currently available on personal pension contributions at marginal rate tax, increasing the amount invested for your future benefit (subject to annual allowances).
If you make employer pension contributions, either for your employees or for yourself as a director of a business, these payments are deemed to be a business expense and can therefore reduce your profits and reduce corporation tax.
Starting early is therefore the key to building a sufficient pension pot, but it is never too late to start.
Pensions are simple in concept but can be complex in practice. It is vital to seek expert advice in order to ensure that correct planning is arranged. Contributions remain subject to annual and lifetime limits, which can affect the amount that can be paid into pensions tax efficiently.
Pension Consolidation
Many of us will have numerous pension pots set up during our working life, often invested with different companies, making it difficult to monitor our overall retirement provision. We can assist with consolidating your pensions into a single pot for ease of administration and monitoring.
Retirement Drawdown
When you come to retire there are different options available to take your pension income. One of these is pension drawdown. This has become more popular in recent years due to pension freedoms. Income can be taken at any amount, ranging from large lump sums to small amounts of regular income.
The flexibility to alter income year to year allows you to tailor your income requirements to suit your circumstances and ensure maximum tax efficiency.
However, as funds remain invested throughout drawdown, the most important aspect of drawdown is to ensure your fund is managed to sustain funds throughout your lifetime. Regular reviews of investment returns and life expectancy can help to plan a sustainable income during your lifetime and ensure any funds are distributed to your beneficiaries after your death.
Annuity
An Annuity is an insurance policy that you purchase with your pension funds to provide you with a set income. An annuity offers the certainty of a guaranteed income for life. Annuities can remain level in payment or increase each year at an agreed rate. If you opt for a fixed annuity then your income will not increase in line with inflation which could mean your standard of living drops over time.
As annuities cannot be altered after purchase, there can be a lack of flexibility with this option. However, there are also options to take short term annuities alongside a drawdown arrangement. This also allows for a guaranteed income at certain points whilst retaining flexibility when needed. An example would be retiring early and needing income before the state retirement pension starts.
Our initial no-obligation meeting is free of charge and allows us to look at your financial profile to ensure a strong ongoing relationship can be built.
8 Corunna Court, Corunna Road, Warwick, CV34 5HQ
01926 498808 | enquiries@davidsonpertfa.co.uk