Reviewing your existing pensions
At Giliker Flynn Independent Wealth Ltd, we are often contacted by pension holders who believe they have ‘old’ or ‘frozen’ pensions. It is a common misconception that pensions that are not paid into are ‘frozen’. Whilst an old pension may not be receiving any regular contributions, the pension will still be invested in a pension fund attracting both growth and losses.
It is vitally important that you review any pensions that you have on a regular basis. If you leave employment and subsequently stop contributing to their pension scheme, it does not mean that your pension can not still earn money for you.
Ensuring your pensions are invested in the right product, with competitive charges and investment funds that match your attitude to risk, can make the difference of thousands of pounds in retirement. At Giliker Flynn, we offer expert pension advice in Newcastle under Lyme and Stoke on Trent, our main aim is to ensure that you achieve your pension goals.
Final Salary Pension Transfers
Since Pension Freedom in 2015, we have since an incline in the number of people pursuing their options at retirement. Whilst a defined benefit pension (or as it is more commonly known a Final Salary pension) is often referred to as the ‘Gold Plated’ of pensions, the new flexibility in retirement has put less emphasis on the importance of a guaranteed income in retirement.
Final salary pensions offer a guaranteed income in retirement that often increases by inflation each year. For the majority of people, this will always remain the most suitable option in retirement and the income offered is unlikely to be beaten by an alternative pension arrangement. This being said, however, aside from Public Sector pensions, you are able to transfer the pension into a personal arrangement instead of taking your benefits directly with the scheme. This is called a Cash Equivalent Transfer Value. You are entitled to a free transfer value every year, and it is based on the value of the benefits given up.
Although a personal pension/drawdown plan will not offer you a guaranteed income in retirement, a transfer of benefits may be suitable depending on your circumstances. The following reasons may provide some justification for looking into a possible transfer from a final salary scheme:-
- Marital status (ie if you are single or divorced and the scheme only offers a spouses pension)
- You cannot access your pension early and you require the money now
- You need more capital than the scheme is offering
- You require flexibility to suit your circumstances
- You do not need the guaranteed income and have other assets to rely on in retirement
You cannot transfer your pension if it is over £30,000 without the advice of an Occupational Transfer Specialist. Frances Giliker is our in-house Pension Specialist who offers this advice. Due to the amount of work involved, we do not provide advice for pension transfers that are under £100,000.
Today many people find themselves ‘living for today’ and not saving extra money for later years in life. Whilst at the time this can be fun and exciting, with the new state pension at around £155 a week, this will only provide a single person with £670 a month. Assuming there is no debt in retirement, the average cost of living is now around £10,000 in the UK (Money advice service). This includes fixed bills and the cost of food. Using these statistics, if there has been no additional saving into a personal or occupational pension, you may be facing a shortfall in your retirement.
Are you aware that for every £100 that you put into a pension, the government will top this up by £25? For example, if you make a regular contribution of £100 a month for 10 years, this will attract £3,000 in tax relief. Aside from ISAs, pensions are the most tax efficient investment you can hold in the UK. You can contribute your total earnings or a maximum or £40,000, whichever is lower.
As guidance, you should be contributing into a personal or occupational pension as soon as you start working, and continue with the contributions for the rest of your working life. In fact, it is now a legal requirement for your employer to offer you a pension, and if you contribute into the scheme, your employer MUST make further contributions into the scheme. This should be a minimum of 3% of your total earnings by 2019, with the overall contribution increasing to 8% of your gross earnings.
Speak to our team today for expert pension advice in Newcastle under Lyme & Stoke on Trent
If you are concerned about your current pension or you require fully independent and impartial advice, why not contact our friendly and helpful team today? With more than 10 years’ industry experience and expertise, we can offer you professional pension advice in Newcastle under Lyme and Stoke on Trent and it all starts with a free initial consultation!