Planning for the quality of life you want in your golden years

Looking forward to a secure and financially independent retirement

Saving for your retirement may not seem important when you’re starting out. But the sooner you start saving for your retirement, the more secure your future will be.

It’s so important to invest for your retirement. Putting as much as you can into a pension provision as soon as you can gives you a much better chance of having the retirement you want.

When planning your retirement, there are three main types of pension you need to consider. These are State Pensions, private personal pensions and occupational workplace pensions.

Whether you are thinking of starting a pension, reviewing your existing pension provision or are about to take benefits from a scheme, there are many issues you should discuss with us:

•    At your age, how much should you be saving?
•    Could you optimise your tax position for retirement by also saving in an alternative tax-efficient vehicle?
•    Would bringing existing pension funds you have built up together in one place help you manage them better?
•    How can you maximise your pension contributions as you reach retirement age?
•    What might you expect by way of pension from the State and when will you receive it?
•    What’s the best time to start taking income from your pension fund?
•    What are the alternatives to buying a pension annuity and why might they be better for you?
•    How can you use your tax-free cash allowance to the best advantage?
•    What if you want to take your pension fund overseas?

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of and reliefs from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This information does not constitute investment advice and should not be used as the basis of any investment decision, nor should it be treated as a recommendation for any investment. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.

Professional financial advice you can trust
The quality of life you want in your future retirement years will depend on what you contribute in the present. Planning your finances can help to ensure that you have peace of mind, so that you can look forward to a secure and financially independent retirement. To discuss how we could help you achieve this goal, please contact us.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:
01527 880345
 

Visit our Website at:
www.pps-vet.co.uk

Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority
The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice.
Article Reference: PPS062014.18

Ho Ho Ho! Merry Christmas!

  Ho Ho Ho! Merry Christmas & our best wishes for a happy and prosperous New Year. Please note PPS Christmas Opening Hours.Here a select few photos from our Office Christmas Jumper Day and our Office Christmas Party

Decisions that determine your standard of living in retirement

The choices you need to make that will determine how much income you live on once retired

Sooner or later we all retire, and the decisions you make today are the ones that will determine your standard of living in retirement. If you are approaching your retirement, there are some very important choices you need to make that will determine how much income you live on once retired.

Firstly, you’ll need to check your personal, company and State Pensions. You must make sure you have enough income to provide for your needs in the future. If you are planning on using your pension to buy an annuity when you retire, it is essential that you don’t just accept the deal offered by your pension provider, as you could potentially lose out on a significant amount of money over the lifetime of the annuity.

Exercise your Open Market Option
You should always exercise your Open Market Option that will enable you to get the best possible deal for your pension fund. Comparing the different rates available – instead of buying an annuity from the company with whom you have built up your pension savings – could result in a significant increase to your retirement income, depending on your circumstances.

You can buy your annuity from any provider and it certainly doesn’t have to be with the company you had your pension with. The amount of income you will receive from your annuity will vary between different insurance companies, so it’s essential that you receive professional financial advice before making your decision.

Don’t forget about inflation
As you are likely to spend around 20 or even 30 years in retirement, remember that inflation could have a serious impact on the purchasing power of your savings. If you have opted for an inflation-linked annuity rather than a level annuity, then you will have protection against the rising cost of living.

Work out carefully how much income you need to draw
When you retire, you don’t have to go down the route of purchasing an annuity. An alternative to purchasing an annuity is to leave your pension invested and take a portion of the pension pot each year as an income, hence the phrase ‘income drawdown’. This option may also mean that you could possibly leave your family some legacy when you die, as your pension pot, after tax of 55%, passes on to your family according to your wishes. However, if you take out too much, your capital could soon be eaten away. But the upside of not buying an annuity is that your funds remain invested with the potential for further growth.
 

Another route worth considering is flexible drawdown
To qualify for flexible drawdown, you must have a guaranteed pension income of £12,000, known as the ‘Minimum Income Requirement’. If you are eligible, then you can withdraw the rest of your pension fund in a manner that best suits your circumstances, whether that’s in its entirety or in part withdrawals. It is often sensible to make withdrawals over several years though, as you still pay income tax on any withdrawals, so the larger the withdrawal, the more tax you’ll pay.

Have you forgotten about any other pensions?
It can be easy to lose track of pensions over time, especially if you move from job to job, but you can locate a lost pension by contacting the Pension Tracing Service online at www.gov.uk/find-lost-pension. This service is free, and if they locate your pension, they’ll give you the address of your scheme provider.

This information does not constitute advice and should not be used as the basis of any financial decision, nor should it be treated as a recommendation for any specific product. While annuities are generally guaranteed to be paid, remaining invested and using drawdown means that the value of your pension, and the income from it, can go down as well as up. Therefore, there is a chance that you may not get back as much as you would by using an annuity. Drawdown is a high-risk option which is not suitable for everyone. If the market moves against you, capital and income will fall. High withdrawals will also deplete the fund, leaving you short on income later in retirement. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.

Professional financial advice you can trust
Not sure about your retirement options? There is a lot to think about as you approach your retirement. Contact us to discuss your retirement options and we’ll help you decide what’s right for you. We look forward to hearing from you.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:

01527 880345

Visit our Website at:

www.pps-vet.co.uk

Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority.

The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice

Article Reference: PPS062014.GM15

Choosing the retirement option that's right for you

The freedom to choose how and when you access your pension

Your retirement should be something to look forward to, not worry about how to make ends meet. Whatever you want to do, understanding how to build up enough retirement savings and how pensions work should help you achieve your goals.

Your accumulated pension pot will have been hard-earned over years of work. It is only right you eventually have the freedom to choose how and when you access your money during your retirement.
Currently, people don’t have total flexibility when accessing their defined contribution pension during their retirement – they are charged 55% tax if they withdraw the whole pot. But from April 2015, people aged 55 and over will only pay their marginal rate of income tax on anything they withdraw from their defined contribution pension – either 0%, 20%, 40% or 45%.

How the current system works
Under the current system, there is some flexibility for those with small and very large pots, but around three quarters of those retiring each year purchase an annuity.

Current pension pot options
You can currently take up to 25% of your pension pot tax free.
With the remaining amount, you have these options:

•    If you are aged 60 and over and have overall pension savings of less than £18k, you can take them all in one lump sum – this is ‘trivial commutation’
•    A ‘capped drawdown’ pension allows you to take income from your pension, but there is a maximum amount you can withdraw each year (120% of an equivalent annuity)
•    With ‘flexible drawdown’, there’s no limit on the amount you can draw from your pot each year, but you must have a guaranteed income of more than £20k per year in retirement
•    Buy an annuity – an insurance product where a fixed sum of money is paid to someone each year, typically for the rest of their life

If you withdraw all your money, you are charged 55% in tax. Regardless of your total pension wealth, if you are aged 60 or over, you can take any pot worth less than £2k as a lump sum, as this classifies as a ‘small pot’.

Budget 2014 changes announced
Announced during Budget 2014, commencing 6 April 2015, from age 55, whatever the size of a person’s defined contribution pension pot, the proposal is that you will be able to take it how you want, subject to your marginal rate of income tax in that year. As previously, 25% of your pension pot will remain tax-free.

There will be more flexibility. However, for those people who continue to want the security of an annuity, they will be able to purchase one, and those who want greater control over their finances can drawdown their pension as they see fit. People who want to keep their pension invested and drawdown from it over time will be able to do so.

To help people make the decision that best suits their needs, everyone with a defined contribution pension will be offered face-to-face guidance on the range of options available to them at retirement.

Interim changes
A number of interim changes apply from 27 March 2014, prior to the proposed changes commencing from 6 April 2015.

These include:
•    The amount of overall pension wealth you can take as a lump sum has been increased from £18k to £30k. In addition, the amount of guaranteed income needed in retirement to access flexible drawdown has been reduced from £20k per year to £12k per year.
•    The maximum amount you can take out each year from a capped drawdown arrangement has been increased from 120% to 150% of an equivalent annuity.
•    The size of a small pension pot that you can take as a lump sum, regardless of your total pension wealth, increases from £2k to £10k.
•    The number of personal pension pots you can take as a lump sum under the small pot rules increases from two to three

Who benefits?
The interim changes will mean around 400,000 more people (according to the Government) will have the option to access their savings more flexibly in the financial year 2014/15.

From April 2015, the 320,000 people who retire each year with defined contribution pensions will have complete choice over how they access their pension.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of and reliefs from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This information does not constitute advice and should not be used as the basis of any financial decision, nor should it be treated as a recommendation for any specific product. Although endeavours have been made to provide accurate and timely information, Professional Practice Services cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions.
 
Retirement planning checklist
1. Always check your annual pension statement, and if you don’t receive one, ask for one.
2. You should pay as much as you can reasonably afford to your pension funds.
3. Consider receiving a higher income by deferring retirement (however, this is not guaranteed, as annuity rates, legislation and market conditions may change).
4. When buying an annuity, always shop around for the best deal.
5. You can continue to work in retirement, and your tax-free personal allowance increases from the age of 65.

Professional financial advice you can trust
This radical announcement to give retirees more choice as to how they take the income from their pension fund will mean that other options may now be given more consideration. These changes make it even more important, if you are approaching retirement, to seek professional financial advice in order to make the most of your pension pot. If you would like to find out how the changes could affect your future retirement plans, please contact us.

Call our friendly, knowledgeable team for a confidential, no obligation discussion:

01527 880345

Visit our Website at:

www.pps-vet.co.uk
Professional Practice Services is a Veterinary Business Consultancy and Independent Financial Advisory Firm. Professional Practice Services is authorised and regulated by the Financial Conduct Authority.

The Financial Conduct Authority does not regulate finance, will writing, commercial lending, taxation or trust advice

Article Reference: PPS062014.GM14