Take advantage of a 'free' pay rise

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take advantage of a free pay rise

The sooner you start saving the more your pension will grow.

You might think pensions are too complicated and you don’t understand them, but the fact is they are a crucial, tax-efficient savings vehicle that can help give enough money to live on in your retirement.

Worryingly though, only two thirds of UK adults are currently saving for retirement, and of those many aren’t saving at a level that will give them the pension pot they hope for in retirement.

Advice matters whatever stage you're at

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Advice

The financial products and services we need to navigate through life will change with our circumstances. In the early years, our financial needs are likely to be more straightforward, getting increasingly complex as we grow older and experience more of life’s rich tapestry.

Confused about pension planning?

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Confused about pension planning

More UK employees are savings for their retirement than ever since the launch of Automatic Enrolment six years ago. However, research from the Office for National Statistics (ONS) has revealed that many people contributing to their workplace scheme don't actually realise they're saving for retirement. 

Auto Enrolment took effect in 2012, when it was made complusory for employers to enrol their staff into a workplace pension scheme and rolled out phases. Latest figures suggest that over nine million invidiuals are now newly saving or saving more for retirement. 

37% of those surveyed by ONS didn't realise they were contributing to their workplace pension scheme and could opt out. A risk which might be greater when the minimum contribution level for employees increases from 3% to 5% in April 2019.

So, do you know if you are saving into a workplace pension and if you are, are you saving enough? The industry estimates for a comfortable retirement range between £23,000 and £27,000 a year. So a 25 year old employee earning £30,000 a year would need to save just under £300 a month to achieve the lower figure. 

Simply, the more you save and the earlier you start saving the better position you are likely to be in (subject to investment performance)

If you're concerned about your pension planning, always get advice. 

Please give us a call and we'll help you get a clear picture and straightforward plan to put you on track. 

The cost of retirement

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How much money do you think you’ll need to receive each year of your retirement? According to the investment manager Schroders, working people in the UK aged 55 and over believe this figure would equate to 66% of their current income, but the reality according to UK retirees is actually 53%.

Despite the 13% shortfall, the majority of retired people (92%) felt their retirement income was sufficient. This may not come as a surprise if we consider they are likely to be part of the baby boomer generation and therefore enjoy significant wealth compared to future generations of retirees who quite possibly won’t have the benefit of a final salary pension plan. It might also be the reason that these pensioners can afford to invest one fifth of their retirement income, with the aim of further improving living standards later in life - putting money away for potential care costs, or perhaps boosting their estate for the benefit of their descendants.

Saving more

The fact remains, however, that expectations can often differ from reality; creating a potential shock in store when you reach retirement. In its report, for instance, Schroders found that while people of working-age might expect to spend 38% on living costs in retirement, the figure is closer to 53%. It’s clear that the more you save, the more comfortable your retirement (subject to the usual investment ups and downs of course). And when it comes to making investment decisions for retirement, advice is key. Whether you’re early on in your career and just starting to think about putting money aside for retirement, or your last day at work is looming and you’re preparing for a new phase in life, the investment and savings decisions you make now can make all the difference to how comfortable you are in your retirement.

Talk to us to find out more.

The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.

 

Savers in the dark about their pension

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Are you in the dark about your pension

Are you among the 30.4 million working-age people who don’t know if their pension pot will be big enough to afford a comfortable lifestyle in retirement? 

According to a report by the Pension and Lifetime Savings Association (PLSA), some of the blame for this worrying statistic could be down to simply not knowing how much retirement income is needed. Perhaps unsurprisingly then, 70% of those questioned said they would save more if they had a target to aim for.

So how do you go about finding the income target that’s right for you?

We could look to Australia, where savers have defined income goals depending on whether they want a 'modest', or 'comfortable' standard of living in retirement. Here in the UK, if the study by Which? is anything to go by, every household needs a pension pot of at least £370,000 to feel comfortable in retirement.

Take control of your spending – and saving

Of course, everyday living expenses and the cost of renting or buying a home will take priority with your finances. And if you have a dependent family those ‘everyday’ costs will demand a bigger slice of your available income. But at the same time, it is extremely important to start saving as early as possible.


Worryingly though, current savers could be hugely underestimating how much they would need to set aside for retirement, with the average Brit saving just 12% of their annual income, something that would create a significant shortfall in disposable income once they reduce, or stop working.

We can help you set clear investment goals and plan for a comfortable retirement. Please contact us to find out how. 

 

The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.

Making the most of your pension savings

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Making the most of your pension savings

Thanks to there being no major changes announced to pensions in the October 2018 Budget you can continue to pay into your pension over the next 12 months without any surprises to knock you off track.

This does, however, present a great time for you to review your pension savings. Are you confident you’re saving enough to support the lifestyle you want in retirement? Put simply, a pension is a long-term savings plan which grows over time and provides you with an income to see you through your retirement. There are many benefits to paying into a pension plan:


Tax Relief

Did you know that if you’re saving towards a pension between the ages of 18 and 75, you can receive significant contributions from the government on top of the amount you save?

This is because you receive tax relief on the contributions you are paying in: 20% for basic-rate taxpayers, 40% for higher-rate taxpayers and 45% for additional-rate taxpayers.

As an example, for a basic-rate taxpayer, for every £100 you pay into your pension, the government will top it up by £25 giving you a total contribution of £125. You can get even more if you’re a higher-rate or additional-rate taxpayer.

 

A top up on your salary

If your employer has a pension plan set up as an employee benefit, they will also pay contributions to your pension plan (up to a certain level). Think of it as a top-up on your salary.

 

Compound interest

When you save money into your pension you’ll hopefully make a return on the investment, subject to performance of course. The following year you'll hopefully get a return, not only on your initial investment but also on the return from the previous year, and so on. You’re effectively earning money on previous gains which are all added into your pension pot.

If you want to discuss your pension planning in more detail then speak to us and we’ll make a recommendation based on your individual circumstances.

There are rules regarding how much you can contribute to a pension and how much the government will add to your contributions through tax relief. The value of investments and any income from them can go down as well as up and you may not get back the original amount invested.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

 

 

As an employer do you take advantage of the annual tax-free allowance for financial advice and guidance for your employees?

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The recent Office of National Statistics (ONS) Labour Market figures have highlighted a growing need for employers to provide financial wellness advice and guidance to their staff.

The ONS reported that under-35s accounted for 90% of employment growth with 70% of those under 34 required regular borrowings to meet their financial obligations.

Whilst employers may be aware of a number of other benefits which are offered to employees, such as childcare vouchers, health screenings and dental insurance, there is the increasing factor to include financial wellbeing into the mix.

Is this something as an employer you would be willing to offer?

By offering financial advice and guidance (which can be delivered in the workplace) it could provide the extra assurances an employee needs to ease their personal financial anxiety and debt. It could also help boost employee productivity and loyalty.

The annual tax free allowance for financial/pension advice is £500 per employee.

If you offer employee benefits/wellbeing schemes within your business and are considering including financial advice and guidance contact us to see how we can help your employees with their financial wellbeing.

 

Source - https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2019

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