Submitted by
Sestini & Co | on Mon, 09/14/2015 - 19:35 | In
Tax planning and pensions So, tomorrow is Pensions Awareness Day, it seems that practically every week marks something or other (Eliza Doolittle Day, anyone?) but this has real substance. As explained neatly in the Awareness Days Calendar, as well as promoting awareness of the need to save for retirement, Pensions Awareness day is also a serious campaign for better communication by employers and pension providers.
It’s also an opportunity to take a few minutes to think about your retirement savings strategy and whether it still meets your current goals and aspirations.
When did you last look in detail at your pension savings?
- Many of us have pensions which were geared to a previous career or a notional retirement age which hasn’t been reviewed for some time. If you are dreaming of retiring at 45 but still have your pension contributions set at a level appropriate to retirement at 65, something needs to change.
- Some still have defined benefit “final salary” schemes linked to roles early in their career which bear no relation to their current earnings or earnings potential.
- Even more of us haven’t yet reviewed our savings in light of the new pension freedoms which were announced last year. Now there is no longer a requirement to purchase an annuity, with tax relief on contributions and 25% of the pension fund tax free, it makes sense to max out contributions into the more flexible types of pension plan such as SIPPs and SSAS’s.
- Given the lifetime and annual restrictions to pension contributions, it’s also worth thinking about retirement savings outside of pensions: both ISA’s and Enterprise Investment Scheme (EIS) approved investments are tax efficient and also qualify for inheritance tax relief. And even with the most recent proposed changes to the taxation of landlords, capital growth on property still enjoys tax free growth until the point of sale.
Most of all, whatever types of investment you choose, the most important thing is to ensure you regularly review all the savings you have in place for retirement and what this means for your target retirement age and don’t assume this won’t change over time.
If you’d like to discuss planning for your retirement and how this can be achieved tax efficiently, do contact us, info@sestiniandco.co.uk.
