Pay attention to Pensions

The best way to save for the future

Pension debate

Should I have one at all?

It is important when considering long term savings that these three things are considered:

  • Taking an income from property (main residence or second homes.)  
  • Tax -efficiencies 
  • Work-place pension

1. Taking an income from property

You are not guaranteed of an exact amount at retirement but unlike property investments, risk can be managed with pensions, as money is invested across fund choices to decrease risk in any one area of investment. This means that when you come to retire you should be on track to receive something like the income that you expected, depending, of course, on how much you are willing to put into your pension, between now and retirement. Property prices can fluctuate and there are no guarantees you will be able to secure the right income from it.

A property can be left to a loved one, but it has to form part of the person’s estate on death and could be liable to IHT.

2. Tax-efficiencies

Pensions are the most tax efficient way of saving—not only in terms of putting money in, but also taking money out. So, if you are a basic rate tax-payer and are paying in £100 per month into a pension, it will only actually cost you £80. 

There is also the added benefit of
having 25% of your pension fund, as a
tax-free nest egg, accessible from the
age of 55years

3. Work-place pension

Employers are required, by law, to offer their employees a workplace pension scheme and we would always advise joining your work-place pension scheme as your employer will make contributions on your behalf. You should be automatically enrolled in your workplace pension scheme, unless you have actively stated that you do not want to pay into it.

Un-decided?  See how Matt persuades Rachel how easy it is to set one up… 

Hi! I’m Maggie!

I have been a client of Brighter’s for over 20 years. In the early days they helped me understand how much I could afford to put into a pension.

After that, they helped me look carefully at all my bits of pension and make sure I wasn’t paying more than I should in administration charges

The pension they helped me save into has led to this day, when I am able to think of finishing work

Hi! I’m Maggie!

I have been a client of Brighter’s for over 20 years. In the early days they helped me understand how much I could afford to put into a pension.

After that, they helped me look carefully at all my bits of pension and make sure I wasn’t paying more than I should in administration charges

The pension they helped me save into has led to this day, when I am able to think of finishing work

I have a pension

So what now?

The years you are saving into a pension are the relatively easy part but once retirement starts looming, from about 40 years onwards it is very important to have your pension reviewed to ensure that:

  • You have enough income to live off in retirement and are making the most of your work-place pension scheme
  • You have not paid too much in administration charges and fees
  • Leaving your pension to someone else

1. Income from the pension

We carry out income modelling for our clients. This way they can see projections of their income and savings into the future and how these will be impacted with life choices and particular circumstances. Having this information helps our clients to plan their finances carefully. Always pay into a work-place pension too, as your employer will make a contribution on your behalf.

2. Fees and charges

It is important that you only pay fees that are competitive in the market so that you keep most of your money in your pension pot. Having too many pensions in different places can confuse matters and leave you paying higher fees than you need to. Make sure you see if having all or some of your pensions placed into a single plan would be better for you.

3. Leaving a legacy

You can nominate a pension to be passed to your relative or partner in the event of your death and it does not have to form part of your estate for IHT purposes. This means that your loved one can receive the pension on your death without the need for it to be included in your estate for probate purposes.

Free Pension Review

We’ve helped hundreds of people to create tax-free savings via pensions.

Could you be the next person we help?

Hi! I’m Josh!

I spoke to Brighter after I left my employer and went self-employed. I wanted to know what would happen to my pension.

Their advice and review were free, all I paid for was the setup charge for a pension that was right for me being selfemployed. This was taken out of the pension contributions so I didn’t have to find a fee payment up-front.

For a no-obligation, free pension review,
Or contact us on 01422 832100 or at admin@brighterfs.com

Pension Accumulation

The table below describes the value of a pension pot that is started by someone at differing ages. The date of retirement is set to 62 years of age. The values are calculated on a 6% annual growth rate and inflation set at 2.5%.

It is worth noting two things from these figures:

1. Starting as early as possible with a smallish amount, provides the best chance of accumulating a decent pot by the time retirement comes

2. Starting any later than age 25 years old means that marginal increases in the amount invested is unlikely to return the amount realistically required at retirement.

Questions…

…and answers…

Why do I need another pension if I already pay into my employer’s pension?

The simple answer is you don’t. However, it is important to know that you have the right amount (based on what you can afford) going into your pension, so that you have enough to retire on.

I don’t think I need a pension as I own a couple of Buy to Let’s. I’ll just use the income from these to retire on. Is this wise?

Unlike property risk can be managed with pensions, as money is invested across fund choices to decrease risk in any one area of investment. This means that when you come to retire you should be on track to receive something like the income that you expected not just the sale value of your property at that time.

I really don’t think that I can afford paying into a pension. What’s the best way to go about it?

Start early and you will find that you are paying in less now than you would be if you got into your 40’s and then decided to start a pension. By then, to catch up with the years that you have lost in paying in, it could be very hard for you to find enough money.

I am worried about the cost of a financial adviser. Are they worth it?

It is true the cost of Regulation around all forms of financial advice does push charges up but we have kept our costs to the minimum that we can manage and don’t ask you to pay for servicing when you are just building a pension pot.

So what if I have any more questions?

Just call us on the number provided or use our secure contact form and we will get right back to you.