Plan for a Secure and Comfortable Retirement
What Is a Pension and Do I need One?
Pensions are an investment wrapper, usually used for retirement, however they are not exclusive to retirement funding and can be used for other purposes, such as ad hoc costs i.e. holidays after the “normal minimum pension age”, currently 55, due to increase to 57 in April 2028.
They provide a tax efficient savings vehicle whereby it receives full tax relief on contribution. Most people will fund a workplace pension where the contributions are normally deducted before income tax and national insurance (salary sacrifice) although alternative arrangements are available to employers.
Pension plans primarily come in 2 types:
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The vast majority of workplace pensions are “defined contribution” schemes, which are investment linked. Therefore, the amount you receive in retirement is dependent on your level of contribution, investment growth, investment term, charges and risk.
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Another type of pension scheme is a “defined benefit” scheme, whereby the policy holder will receive a defined income at their normal pension age. The amount they will receive is based on predetermined factors i.e. an accrual rate. Some of these schemes are funded (via investments), most commonly found in the private sector, others are unfunded, such as the NHS pension scheme. In either variant, the pension member is not responsible for the underlying management or performance of these schemes.
Pensions are a highly tax efficient method of funding retirement expenses, albeit they are not the only method. Alternatives such as rental properties and investments can also be used to fund retirement, however this causes its own issue with regards to potential Inheritance Tax, its therefore important to seek regulated advice.
FINANCIAL JOURNEY
The Three Phases of Life
0 - 25
Early years & personal development
This phase is centred around building the foundation for your future. Time is spent developing skills, pursuing education, and starting your career. Financial planning may not be a priority during this stage, but the habits and knowledge acquired here play a crucial role in shaping your financial future.
25 - 60
Working life - Accumulation
The majority of wealth is generated during this phase. These 35 or so working years are pivotal for financial growth and stability. It’s during this time that strategic retirement planning becomes essential to ensure you’re well-prepared for the future. The savings and investments made now will directly influence your quality of life in retirement.
60 - 90
Retirement - Decumulation
Retirement typically begins between ages 60 and 70, a period when physical capability to work often declines. With an average of 30 years ahead, it’s vital that sufficient provisions have been made during the accumulation phase to support a comfortable and stress-free retirement. Planning ahead ensures your hard work translates into security and peace of mind.
I Already Have a Workplace Pension, Is That Enough?
It all comes down to what retirement looks like for you. Consider the below:
What age would you like to retire? the earlier you retire, the longer your retirement pot needs to last
What level of income would you like in retirement?
When and how will your mortgage be cleared?
Will you still have expenses related to your children? wedding costs, house deposit?
How many years have you funded of your state pension?
What level of pension benefits have you accrued and what will they pay in retirement?
As part of the advice process, we collate your existing pension plan information, to build a picture of your overall retirement portfolio. Once the research is completed, we will discuss the benefits of your existing plans and discuss the option of consolidating your existing pensions into a single plan. This will help manage and administer the plan on an ongoing basis.
We’ll help you to understand when you can afford to retire and what level of income you can expect to receive.
We will also advise on the most tax efficient way of facilitating your retirement income, whether this is from a pension alone or a combination of pensions and investments.
Can I Fund More into a Pension?
Absolutely! Once we’ve established your required income in retirement, we can discuss additional pension funding.
We advise on Self Invested Personal Pension (SIPP), which provide a significantly wider range of investment opportunities than employer based scheme.
The maximum you can pay into a pension scheme is based upon your UK relevant earnings (your earned income), subject to a maximum of £60,000 per year. It is also possible to carry forward unused allowances from the 3 previous years.
For individuals who are not working (including children under 18 - Junior pension), it is possible to fund £3,600 per year.
Pension contributions into a SIPP attract basic rate tax relief which is rebated by HMRC. If you invested £2,880, this will be grossed up to £3,600 by HMRC (an additional £720). Higher and additional rate tax payers can claim back the additional 20%-25% via their self assessment tax returns.
What Happens at Retirement?
Monitoring Investment
We can continue to monitor your investment portfolio as you get closer to retirement. Once at retirement, we can advise on the most appropriate way to withdraw your pension benefits. We can also provide cash flow modelling to visual what future retirement income might look like, along with how long it will last.
Withdrawal Advice
We provide advise on a variety of different pension withdrawal methods:
Annuities
Withdrawing your Tax Free Lump Sum (TFC)
Flexi Access Drawdown (FAD)
Uncrystallised Funds Pension Lump Sum (UFPLS)
We will advise on the most appropriate method for you, taking into account your wider financial circumstances.
We help optimise your pension benefits with tailored advice and strategies, ensuring financial security in retirement.
Retirement & Lifestyle Planner
Find out your retirement income in 5 minutes using our Retirement and Lifestyle planner
Why Blackstone Wealth?
At Blackstone Wealth, we believe in truly independent financial advice. With access to solutions from across the entire market, we’re not tied to any provider, ensuring our recommendations are always tailored to your unique needs
Respect
We respect every client, no matter their financial literacy or background.
Trust
The foundation of any relationship, we will always act in your best interest.
Service
We will always aim to deliver above and beyond your service expectations.
Value
Our independence enables us to access a wide range of products , ensuring we meet your needs.
Choosing a financial adviser is an important decision, and we understand it can feel daunting. That’s why we offer a free 30 minute consultation to discuss your goals and see if we’re the right fit for you
Ready to get in touch?
Get started on the path to financial success with Blackstone Wealth
Open Monday to Friday 9:30am - 6:00pm
Suite 500, AW House, 6-8 Stuart Street, Luton, Bedfordshire, LU1 2SJ