Retirement Planning

Click here to find out about the changes to SIPP regulations.

 

 

Even if your retirement is not on the near horizon it is never too early to start planning – in fact, the earlier the better.

You might spend almost a third of your life in retirement and effective planning and investing for this period can help  you do more of the things you always wanted to do when you stop work.

There are many ways to save for your retirement such as buying property or investing in stocks and shares. However, a pension fund is one of the most effective ways to save for your future, not least because of the tax benefits you can enjoy:

 

Tax relief

 

People paying Income Tax can claim tax relief at their highest tax rate on their pension contributions. Tax relief is allowed on contributions up to your total annual earnings or £50,000 a year (for the 2011/12 tax year), whichever is lower.

There is also the facility to catch up contributions missed in earlier years, known as ‘carry forward’.

For every £800 (after tax) of your earnings you put into your pension, the government will add tax relief worth £200 to take the total investment in your pension fund up to £1000.

 

• Higher rate (40%) and Additional rate (50%)taxpayers can gain further relief of £200/£300 (i.e. 20%/30% for 2011/12) through their self assessment tax return, provided they have sufficient tax liability against which to offset it
  
  
• Even non-taxpayers get basic rate tax relief on pension contributions of up to £2,880 net, which equates to £3,600 gross each year.
  
  
• Tax-free growth – your pension fund grows free of income and capital gains tax (although pension funds are no longer able to recover the 10%  tax credit on UK dividend payments)
  
  
• Pension Commencement lump sum – up to 25% of your pension fund can usually be taken as a single payment, currently tax-free from age 55

 

Whether you are new to retirement investing, or want to make sure your existing pension provision is working as hard as possible for you, we aim to give you the information you need to understand your options. Remember though that tax rules can change and the value of favourable tax treatment depends on each individual’s circumstances.

 

Our Retirement Planning Centre takes you through comprehensive pensions-related information, including:

 

• The main products you can use to save for your retirement
• The tax relief and allowances you are entitled to for your pension savings
• Your options available when you come to take your pension or retirement benefits
• How to contribute to a pension for your spouse or a child.

 

The information available will help you to understand about pensions, but if you are still unsure about the best course of action for you, in your circumstances, you should seek independent advice. Barclays Stockbrokers does not offer advice. 

 

Saving for retirement