How do I plan my pension?

Effective pension planning is key to achieving the retirement lifestyle you want.

Pensions are a crucial tool in planning and securing your financial future. Increasing longevity and the threats to state benefits mean it’s never been so important to understand and maximise your pension benefits to help you achieve the retirement lifestyle you want.

A pension is a tax-efficient investment plan that you contribute to (and, if applicable, your employer does too) in order to build up capital over the long term – typically to provide an income for when you retire.

If this is something you’ve never looked into before, follow our five simple steps to help ensure you can enjoy your retirement to the full.

Check your state pension

Providing you’ve been paying National Insurance (NI) contributions during your working life, you’re entitled to the State Pension. Information on how much you’re predicted to receive and when you can start claiming can be found on the gov.uk website.

If you’ve reached the State Pension Age but feel that you are not ready to retire just yet, you have the option to continue working and delay taking your State Pension. Once you hit this milestone, you’ll no longer have to pay NI contributions. So by delaying withdrawing your state pension, coupled with the reduction of expenditure in the form of NI, you can boost your overall retirement income.

Pay into a workplace pension

If you’re working for an employer, utilising a workplace pension is a great way to enhance your retirement savings. This is because when you pay in, your employer pays in also.

This process should already be in place within your company, but if you’re unsure, it’s recommended to speak to your HR department. You may be able to contribute more into your workplace pension if you wish, and sometimes employers increase the amount they contribute too.

You should receive an annual statement telling you how much you’ve saved. Use this to help work out if you’re putting away to support the lifestyle you want to live out when you retire.

Start a private pension

If you’re self-employed, or if you simply want to save even more towards your future, then paying into a personal pension is a fantastic option to help you build a larger pension pot.

The fact of the matter is that relying on the State Pension is not going to provide the retirement you’re hoping for.

You’d currently be able to access your pension pot at 55 but this is being increased to 57 from 2028.

By setting up a private pension:

• Contributions receive tax relief, meaning the government will add money every time you contribute.
• Currently, when you reach retirement age, you can draw a 25% tax-free lump sum, take an income, and also access further amounts of pension capital.
• Anyone can contribute – regardless of being employed, self-employed or not working. Other people can also make payments such as an employer, spouse or parent.
• Most are flexible and portable so if your circumstances change (e.g. you start a new job or you stop working), you can still contribute to the same plan.
• You can earn interest on your retirement savings.

There is lots of flexibility when it comes to withdrawing from your pension. You can elect to receive regular monthly, quarterly, semi-annual or annual income payments, as well as ad hoc lump sum withdrawals.

Keep track of all your pensions

Very few people stay with the same company for the entirety of their working life, so it’s very common to have a number of pension schemes from different employers. It’s easy to lose track, which is why there is a fortune in unclaimed pension savings in the UK. Make sure you’ve traced where all your money is held to avoid losing out and to ensure those pensions are working as hard for you as possible.

Speak to a financial adviser

Speaking to a financial adviser is an important part of retirement and pension planning.

By offering a different approach to the complex area of pensions and retirement, keeping it simple and easy to understand, an expert adviser will steer you through the best options for your needs, help you locate old pensions and ensure you are taking the right steps today to achieve the lifestyle that you deserve in the future.

To find out more about pensions and retirement planning or to speak to one of our advisers, get in touch today.

The value of an investment 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 and are dependent on individual circumstances.

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