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Retirement Planning Considerations

The pensions landscape is continually evolving. As such, financial planning options around pensions are now more complicated and more than ever require professional advice, particularly in light of the recent changes pertaining to uncapping income and other new legislation.

The following is a brief summary of some of these changes, their impact and how M&H Financial Planning are well positioned to provide information, guidance and advice to help you through the minefield.

Lifetime Allowance

  • The Lifetime Allowance will be £1 million from April 2016 means that many more pension savers will breach the allowance at retirement, resulting in a punitive tax charge of 55% on the excess.
  • Careful planning is required in the years prior to retirement to maximise the tax efficiency of the pension wrapper whilst also avoiding any unnecessary tax charges.

Contributions and Tax

  • The ability to utilise carry forward to make contributions in excess of the £40,000 Annual Allowance can form a key part of the overall retirement planning strategy.
  • Pension contributions made from a company can provide a very tax--efficient method of extracting profits from a business.

Pension Consolidation

  • Many older style pension contracts have significantly higher charging structures, often with limited investment options, this can have a considerable effect upon the fund value at retirement.
  • It is important to regularly review pension plans in order to ensure that arrangements remain competitive, both from a charges and investment perspective.

Income in Retirement

  • Recent legislative changes provide for planning opportunities around the structuring of income in retirement.
  • Although there is now greater freedom provided allowing significant sums to be drawn from pensions, it is important that this is managed in a tax-efficient manner.

Death Benefits

  • The 55% lump sum death tax applied on funds in drawdown will no longer apply from April 2015.
  • This means that pensions are now able to be passed down though multiple generations. As pensions are not liable to Inheritance Tax this can allow significant wealth to be passed on to family members in a tax-efficient manner.

Click to download our Insight on Pension Death Tax and Self Invested Pensions (SIPPs & SSASs).

Call us today to discuss your individual requirements on 0845 828 1000 or email one of the M&H Financial Planning team.

Contact our Financial Planning Team

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