Pensions and Retirement Planning

With the advent of the Buy-to-Let phenomena many people turned to property as the safe haven for building up capital and income for retirement. Recent events however have caused people to think again. Investing in property is certainly not for the casual investor and from an investment perspective; the risks are considerably higher as you are only investing in one market sector (UK residential property).

People are now moving back to pensions as they feel safer providing for retirement this way and they are right to. Pensions provide a tax efficient environment across a range of market sectors and as we all know, security comes with a well spread investment. Pensions provide access to all types of funds to fit any type of investor, so whether you are cautions, moderate or adventurous there are funds to suit.

Since the 6th April 2006 (known generally as 'A day'), pensions went through a quiet revolution as the government implemented changes to simplify pension provision and make them more flexible and cost effective. In general this means older style pension contracts are less flexible and have higher inbuilt charges which impedes the growth potential of these schemes.

At TWP Wealth Management, we provide a free Pension Performance Review for our clients to ensure their existing pension funds are in the best environment. We do this by analysing your current arrangements with you and then contrasting this with what else is available in the market whilst taking account of your own plans, preferences and investment attitude.

Retirement Planning

We have access to wide-ranging retirement products from some of the best providers available, basing our recommendations on our knowledge of you and your attitude to risk.

There are many forms of pension scheme and we can help choose the right one for you.

Personal Pensions

Traditionally used by the self-employed or employees who do not have an occupational pension scheme available, they offer very flexible options. They are offered by a large number of providers and it is possible to select a broad range of investment options to suit the risk profile and term to retirement of each individual. At retirement it is possible to withdraw 25% of the accumulated fund as tax-free cash whilst the balance must be used to provide a lifetime income.

SIPPS

TBC

Stakeholder Pensions

This is a specific form of personal pension introduced by the Welfare Reform and Pensions Act 1999 to ensure that all employees have access to a pension scheme through their payroll with a limit on maximum charges. However the limit on charges may mean a restricted choice of funds and reduced facilities.

Annuities

Income from a pension at retirement is frequently achieved by purchasing an annuity. The accumulated fund, after withdrawal of 25% as tax-free cash, is paid to an insurance company that guarantees a set level of lifetime income. It is possible to include benefits such as regular increases, a widow's benefit, or guaranteed periods of payment but additional benefits will reduce the income payable.

Income Drawdown

People with defined contribution pensions often opt for Income Drawdown as a way of providing retirement benefits because of the flexibility it offers in terms of income levels and death benefits. Since April 2006, you can vary your income from this type of plan between nil and around 120 per cent of the equivalent of the annuity you could buy with the same pension fund. These income limits are reviewed every five years. Unlike a conventional annuity, all is not lost on death as your beneficiary can have the remaining pension fund, less a 35 per cent tax charge. Alternatively, they can continue with the income drawdown from the fund, or use the fund to buy an annuity in their own right.