Pension Planning
We all want to
look forward to
a comfortable
retirement, where
we’ll
be free to do all the
things that we never
had time for when
we were working. But when
retirement seems a long way off,
it’s easy to put it to the back of
your mind, and concentrate on
today instead.
Retirement should be a time when you really enjoy yourself, but if you delay saving for it for too long, you could find yourself facing a significant drop in income when the day finally comes.
You may think you don’t need to make any pension arrangements yourself. But as it stands the State Pension is unlikely to provide you with the kind of retirement you’ve been hoping for.
Even if you already have a pension, you’d be well-advised to make sure that it still fits your lifestyle and goals.
This information is based on our current understanding of tax and welfare legislation, which could change in the future.
Make sense of pensions
A pension is a tax-efficient way of saving for retirement. It allows you to build up a fund that can be used to provide an income when you retire. And when you eventually retire, you may be able to take some of the savings as a lump sum – tax free.
You don’t have to be working to start a pension plan and you can have as many different types of plan as you need.
Remember, the value of a pension fund can go down as well as up and is not guaranteed. The level of risk depends on the type of fund invested in.
State Pensions
If you have worked and have paid enough National Insurance contributions, you’ll be entitled to a Basic State Pension which from April 2008 is £90.70 a week for a single person or £145.05 a week for a married couple.
Pension Credit
The Government
introduced Pension Credit in October 2003,
which is a means tested benefit for people over
60. Pension Credit is worked out based on the
level of income and savings that you have. This
could mean extra money for you every week.
From April 2008, it guarantees everyone
aged 60 and over an income of at least:
- £124.05 a week if you are single; or
- £189.35 a week if you have a partner.
And it’s worth knowing that for the first time the Government is rewarding those aged 65 and over for some of their savings and income they have for their retirement.
Occupational Pensions
These are pension schemes provided by an employer. Usually, both the employer and employees will pay into the scheme.
Some schemes pay a pension based on the number of years you have worked for the employer and the salary you earned during your last few years at work. These are called ‘final salary’ or ‘defined benefit’ schemes.
Some schemes invest payments to build up a pension fund. When you retire, you use the fund to provide an income, by buying an annuity. These are called ‘money purchase’ or ‘defined contribution’ schemes.
Personal and Stakeholder Pensions
These are private pensions, which are usually independent of your employment.
Personal and stakeholder pensions are similar, but stakeholder pensions have to meet certain minimum standards set by the Government, and the charges are capped.
Saving for retirement is a serious
commitment, but it doesn’t have to be a
burden.
Expert, qualified guidance, in-branch
You’ll be pleased to know that help is at hand at the Cheshire. In-branch, you’ll find a financial adviser, fully trained and on hand to give you information and advice on a range of financial products.
Your adviser will provide an expert advice service, at a convenient time for you. Once you’ve made an appointment, we’ll let you know what you need to bring with you.
