Pension & Retirement Planning
Audley can advise on every type of UK pension, reviewing any existing plans, and advising our clients how much money should be saved for their retirement
PEnsion advice
Retirement planning is an exercise in thinking about the future, your objectives and all the different elements of a strategy to achieve them. Furthermore, there are some useful tax advantages to pensions that ensure they remain a key component in most retirement plans, in conjunction with several other elements.
You may already have one or more pensions, be wondering how to get started, or how best to use your accumulated funds. We can help with all of this and more.
Starting work is often the trigger to begin contributing to your pension but every time you change job you may be faced with a decision â leave the pension where it is, or, move it to the new employer scheme. If it is a final salary scheme and you are moving to a money purchase scheme you could be giving up benefits in return for a cash value to be invested in the new scheme but what is a fair value for those benefits? Even if they are both money purchase schemes you need to consider the different levels of charges, features and investment options in each. This is a complicated area, which is why people often do nothing, collecting a range of different company pensions over the years, many of which they have lost track of or never review.
For self-employed clients, it is even more important to regularly review pension arrangements. There is no occupational pension scheme to fall back on and it is easy to get so involved in your business that you do not really take the time to manage your own finances effectively. There may well be serious financial planning and tax-saving opportunities that you are missing out on. Let us take a look at your existing arrangements to spot the opportunities and bring everything into line with your financial objectives.
We cover all aspects of retirement planning so whether you need to check how much income you will have in your retirement, review existing pensions, set up a new personal pension, or assess pension requirements for your employees, we can offer comprehensive advice
We provide advice on the following range of pensions:
- Personal Pensions
- Section 32s
- Self-Invested Personal Pension Schemes (SIPPs)
- Trustee Schemes
- Drawdown Plans
- Small Self-Administered Schemes (SSASs)
In 2015 there were huge changes to how people can access their pensions. This means that only those with a personal pension have the freedom to take their benefits flexibly. The rules and options on funding and taking benefits from pension plans continue to demand an advanced level of understanding. We can explain these rules and options clearly and succinctly to help decide the best route to follow. We also offer advice on Auto Enrolment requirements to ensure that your business is meeting the new regulations in the most efficient and productive manner.
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retirement planning
PLANNING YOUR RETIREMENT
When youâre a 16-year-old, a school leaver or a university graduate, Retirement Planning seems to be one of those âoh so seriousâ subjects that only have relevance to your parents and grandparents. Itâs never too late to start planning, but the earlier you do it the better. Audley offer expert advice on how to best plan for the longest holiday of your life. Ensure that when you earn that well-earned down time, your retirement lifestyle choices continue to afford you everything that you deserve and more.
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There are now more ways to save for your retirement than ever before not just pensions, especially with the limits on how much you can save into a pension, many people need to consider alternatives to pensions to provide for their retirement such as other tax-efficient investments
âWho wants to work forever?â
RETIREMENT PLANNING
Retirement planning falls into two separate phases:
- Accumulation
- Decumulation
The first stage is accumulation, and then, after retirement (taking benefits) you enter the decumulation stage.
ACCUMULATION
Accumulation is the period of time where an individual builds their retirement provision through a combination of means:
- State pension & partners State pension
- Company pensions
- Personal pensions
- Future pension contributions (personal and employer)
- Partners pensions
- Savings
- Investments
- Property
Starting to save early is always a good idea as this ensures a long period of accumulation and investments will be held long-term to mitigate the risk with falls in value and help to increase the value of the benefits for your retirement provision.
How much you save will be governed by what is affordable, but Audley can help you understand what your retirement will look like. This will enable you to make decisions on when you can retire
DECUMULATION
Decumulation is the time when you either stop working completely or reduce your working hours to transition to full retirement over a number of years. Some people simply access their entitlement to tax-free cash for any number of reasons (university fees, start a new business, fund an existing business, buy a property, repay debts) and defer any income until such time as they need it.
The time that you have to retire may be outside your control, due to health issues or inability to continue in employment so it is important that you have regular reviews as you approach retirement to ensure your plans remain on target for your desired retirement
As outlined above, some people will have several sources of income in retirement and it is important to understand how each of these interact to ensure that you receive your desired level of income in the most tax efficient way.
TAKING BENEFITS
When drawing benefits from a personal pension there are a number of options:
- Purchase an annuity: This provides you with a guaranteed income for life. You can choose the benefits you require: spouses pension (0%-100%), increasing or level income, guaranteed periods.
- Move benefits to access an Uncrystallised Funds Pension Lump Sum: This allows you to take the entire fund as a lump sum. You will receive 25% tax free, and the rest will be taxed at your highest marginal rate of income tax.
- Move to Flexible-Access Drawdown (FAD): Under the option of FAD you can choose to immediately take 25% tax-free cash from your plan. Then instead of buying an annuity with the remainder of the fund, the money remains invested and can continue to benefit from investment performance in a tax-efficient environment and you draw an income from the fund, or indeed choose not to.
- Move to guaranteed Flexible-Access Drawdown (Third Way pension): These allow you to provide a guaranteed level of income for a set period of time normally 3 or 5 years. At the end of the term, you will receive a known fund value which you can then re-invest in line with your requirements. The level of income can be zero.
- Move to a fixed term annuity: As the name implies, these are fixed term typically 3, 5 or 10 -year term. They offer a higher level of income than a lifetime annuity, which means that you will only have to use a proportion of your fund to meet your income requirements. However, at the end of the term the income will cease and you do not receive any return of capital.
- Move to phased retirement: This option allows you to retire gradually taking a portion of your tax-free cash and/or income in line with your requirements. It can make the most tax-efficient use of your pension fund by having a pre-retirement fund from which you can take tax-free cash and a post-retirement fund from which you can draw a taxable income.
- Move into a hybrid pension: This allows you to purchase an annuity with as much or as little of the fund as required and then utilise FAD for the residual fund, all under one plan, for ease of administration
- A combination of the above: It is possible to utilise a combination of the above in line with your requirements.
As you can see there are a number of options when you are looking to retire therefore it is important you obtain advice at this stage to ensure that your retirement is structured inline with your objectives.
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