Our experienced Independent Financial Advisers will work with you to understand your objectives and create a bespoke plan so you can achieve the lifestyle in retirement you desire.
What is a pension plan?
A pension plan is a pot of cash that you, and your employer, can pay into, as a way of saving up for your future retirement. You will also get tax relief of the money paid in.
Once you have retired, you can draw money from your pension pot or you can use it to exchange for a regular income until death, this is called an annuity.
How much should I put in a pension?
With pensions, the basic advice is to put in as much as possible, as early as possible. If you delay saving into a pension, you’ll need to contribute a higher percentage of your pay to achieve a comfortable retirement. The compounding effect of investment returns can make a massive difference over the long term.
With auto-enrolment workplace pensions, there are minimum contribution levels and both you and your employer will need to contribute.
The different types of pension:
The main distinction is whether the pension is a final salary or a money purchase pension. There are also many different options available to you, and sometimes the choice can be overwhelming.
Let us help you understand the options you have and work with you to build a pension portfolio that suits you both now and in the future.
The basic State Pension/ the new state pension
In addition to any pension provisions you or your employer have made independently, you will be entitled to a state pension. The amount you can claim will be dependent on the amount of National Insurance contributions you have paid and the date you can claim, will be dependent on the year you were born. For more information visit this link. You can also obtain a pension forecast by registering for the Government Gateway service.
Is my pension safe?
Despite negatives headlines, the good news is there are robust industry safeguards in place to protect the majority of pensions. Up to £85,000 per person, per institution is fully protected by the UK’s Financial Services Compensation Scheme.
If you've got a defined benefit (final salary) pension in the private sector and your employer goes bust, this may have knock-on implications for its pension fund. The Pension Protection Fund (PPF) was set up to pay the pensions of any members whose pensions might be impacted in this way. Payments are usually as follows:
- 100% compensation if you’ve reached the scheme’s pension age, subject to a cap.
- 90% compensation if you’re below the scheme’s pension age, subject to a cap.
In other words, you shouldn’t have much to worry about even if your pension scheme does collapse – provided the government keeps the PPF sufficiently funded.
If you have a public sector pension that is centrally funded by the taxpayer, then the scheme cannot go bust as payments are met from government spending.