Planning for retirement needs to be considered as early as possible, to help you to have a comfortable retirement. The pension landscape has undergone a series of momentous changes in recent years, with a possibility of further changes to come.
As such, there is still a significant degree of confusion around how to invest for and access pension pots, which can make retirement planning somewhat challenging.
Sweeping changes to pensions were introduced by the Government back in 2015, designed to make accessing pensions more flexible. These have had a significant impact on retirement planning in the UK as it is now possible to have unrestricted access to your pension from age 55, subject to your marginal rate of income tax.
As such, it is more important than ever to have access to expert, trusted advice, in order to be able to plan the best approach. It is also important to understand how you can use these changes to pensions to make your pension pot work harder for you. With the right advice and knowledge, it could be possible to invest your pension so that it could potentially generate additional income for you throughout retirement.
Investing into your pension
Before you reach retirement age, however, there are also other aspects to consider. At the moment, unless you are a higher earner (earning over £150,000 per annum), you can save up to £40,000 per year into your pension and you have a Lifetime Allowance of £1,055,000 (2019/20 tax year). However, those earning higher amounts will see their Annual Allowance figure reduce on a sliding scale to £10,000. However, it is possible to save more than this by taking advantage of any unused allowances from previous tax years if you have not already done so. Again, this is an area where having access to the right advice can help you invest in the most tax efficient way possible.
As you approach retirement age, it is important to consider not just how you plan to access your pension, but to look at precisely what you need as an income during retirement, in addition to considering any other financial commitments you may have throughout the remainder of your life.
It is also vital to think about how your pension will be passed on after your death. At the moment, under the new pension rules, your pension can be passed to anyone after your death and income taken from the pension by beneficiaries will be tax free if death is before the age of 75.
Pensions and associated tax rules are changing and developing all the time. No matter where you are on your journey towards retirement planning in the UK, it is vital that you seek advice to ensure that you can have the retirement you deserve.
Castell Wealth Management is here to help.
The value of a pension with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.