From 6 April 2027, most unused pension funds and pension death benefits are expected to be included in a person’s estate for inheritance tax. This changes a long-standing planning assumption. For years, many people have been told to spend cash, ISAs and other investments first, and leave pensions until last. That may still be right
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For years, retirement drawdown advice was often boiled down to one simple rule: spend your cash and ISAs first, and leave your pension until last. In many cases, that was sensible. But from April 2027, it may no longer be the default answer. That does not mean everyone should suddenly start spending their pension first.
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When people think about retirement, they usually ask: “Do I have enough money?” That matters. But there is another important question: “Which pot should I take money from first?” If you get that wrong, you may pay more tax than necessary and make your later retirement more difficult. If you get it right, your money
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If you remember the Health and Social Care Levy being announced with a lot of fanfare in 2021… you’re not imagining it. However, the key update is simple: there is no Health and Social Care Levy in place today. It was introduced briefly via higher National Insurance in 2022/23 and then cancelled and repealed before it ever
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Most people don’t actually want to “retire” in one dramatic moment. They want to step down: fewer days, less pressure, more life… while still keeping the future safe. The problem is that a phased retirement can go one of two ways: Designed (calm, controlled, tax-efficient, flexible), or Drifted into (random withdrawals, surprise tax bills, and
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People ask us versions of the same question all the time: “Is £1 million enough to retire on?” “What’s my number?” “How much do I actually need so I can stop work and not worry?” On the surface, it sounds like a maths problem but really, it’s a life question. Most people don’t care whether
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If you have a defined contribution (DC) pension in the UK, it’s essential to understand what happens to your pension savings after you die. The good news is that the rules for distributing DC pension benefits after death are relatively simple. Can I control who gets my pension money when I die? When you die,
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If you’ve changed jobs a few times, there’s a good chance you’ve left a pension or two behind. You wouldn’t be alone. The Association of British Insurers estimates that more than £26 billion of UK pension savings are sitting in “lost” pots. With auto-enrolment now over a decade old, that number continues to grow. The
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Those in control of extracting money from their business have three main options. These are to withdraw the money, either as salary, dividends, or through employer pension contributions. To meet the immediate income needs of a shareholding director, the company accountant will often suggest paying a minimal salary, perhaps up to the secondary earnings limit
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The Chancellor’s Autumn Statement announced that starting in April 2027, money in a pension might be subject to Inheritance Tax (IHT). As a result, more parents are wondering if they should withdraw some tax-free cash now and give it to their children instead. If done correctly, it can be a good decision. If done incorrectly,
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Over the summer, the Government struck a landmark deal with 17 of the UK’s largest pension providers: the Mansion House Accord. By 2030, these companies plan to invest at least 10% of the money in their default workplace pension funds into private assets. This may sound complicated, but it could affect your retirement savings soon,
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Productivity experts suggest that sometimes you have to do less to get more. This is something that equally applies to high earners who paying for childcare. Earnings and Childcare According to the UK government, nearly one million people in the UK earn between £75,300 and £96,400, most of whom are over 35.[1] At first glance,
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One of the key announcements in the recent Autumn Budget was that starting in April 2027, Inheritance Tax (IHT) will apply to pension assets. This is a significant change that could greatly affect our retirement and estate planning. Let’s explain what this means. What’s changing? Pensions have been a great way to pass on wealth
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There’s big news on the horizon for UK pensioners as the full State Pension is set to rise by £362.65 a year starting 6 April 2025. This 4.1% increase is part of the ‘triple lock’ guarantee, which aims to keep pensions valuable over time. If you receive the full new State Pension, your increase will
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Don’t miss out on the chance to increase your State Pension before April 5, 2025. The government is offering a special deal that allows you to fill in any gaps in your National Insurance contributions to boost your pension. You can now go back as far as 2006 to make up for missing years, thanks
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Retirement means big changes in your life, not just stopping work. Saving money is important, but you also need to think about how retirement might make you feel. Some people find it stressful, others find it happy. Many of us worry about money, but if you understand how your money affects your happiness, retirement might
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Lately, there has been a lot of talk about tax and rule changes being announced in the budget on October 30th. You might have heard people expressing worry and making guesses, whether on the news or in conversations with friends. This has been a common topic of discussion lately. However, much of the concern comes
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Planning for retirement is essential but can be complicated. The key is finding the right strategy to ensure a comfortable retirement. In this post, I will look at two popular strategies for retirement planning: retirement bucketing and the standard portfolio approach. We’ll explore the pros and cons of each approach and see which might be
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Last year, the government announced that they were getting rid of the Lifetime Allowance (LTA) for pensions. The LTA capped how much money you could save in your pension pot without getting hit by extra taxes. This change caused quite a stir, and not everyone was happy about it. The Labour Party, for instance, said
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A recent study by the Pensions and Lifetime Savings Association (PLSA) shows that the amount of money required to have a moderate standard of living in retirement has increased significantly. The study found that the increase is 38% or £8,000 more than the previous year. This means that for 2023 to 2024, a single person
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Those in control of how to extract money from their business broadly have three main options. These are to take out the money as salary, dividends, or by making employer pension contributions. When a company director wants to extract profits, they might be advised to pay themselves a minimal salary up to a certain limit
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We have written previously about how it’s become common for employees to exchange part of their salary and/or bonus for increased pension contributions. We previously discussed how this way of saving for retirement may be more attractive than simply contributing as an employee. Attractions of salary sacrifice When an employee pays contributions from their after-tax
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The shake-up to pensions proposed earlier this year is finally coming to fruition. Starting from April 2024, the Lifetime Allowance (LTA) is being scrapped. That’s the limit on how much you can hold in your pension without facing extra taxes. Instead, we’re getting two new allowances to keep an eye on. These are the lump
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Ensuring a steady income during retirement is a paramount concern for many. There are several strategies to address this concern, each with distinct characteristics. This post will explore three popular methods: systematic withdrawal strategies, dividend investing, and annuities. Systematic Withdrawal Strategies These strategies involve withdrawing a certain percentage of your retirement savings annually to provide
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Next April, the state pension is set to see a significant increase. This is thanks to a robust 8.5% wage rise over the three months leading up to July. Let’s explain how the “triple lock” system operates and whether it’s here to stay. What is the triple lock? The triple lock is a mechanism that
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According to figures from Quilter, there has been a significant increase in the number of NHS employees opting out of their pensions due to financial constraints. In the last year alone, 66,749 individuals stopped contributing to their pensions, citing affordability issues or other financial priorities. Opting out of a workplace pension scheme may increase your
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If you’re planning for retirement, you may be considering buying an annuity. Annuities provide a guaranteed income for life, which can be a valuable source of security in retirement. In recent years, annuity rates have been on the rise, meaning you can now get a higher income from an annuity than you could in the
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The State Pension is as close to a guaranteed source of income as you can get. If you have paid enough National Insurance for 35 years, you will receive the full amount, which is currently £203.85 per week or £10,600 per year. This amount will likely continue rising due to the triple lock guarantee, which
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One of the two limits on how much you can put into your pension each tax year is the “Annual Allowance”. This limit was £40,000, but the government increased this to £60,000 in the Spring Budget. There has been a rule that this limit is reduced if your income is too high. If your income
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Many business owners have used their pension funds to buy the properties where their businesses operate. But now, people who don’t own a business are interested in purchasing a commercial property using their pensions. However, it’s important to remember that commercial property values can go up and down, and many factors can affect them. It’s
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The government has removed the limit they had on the amount of money you can save in your pension over your lifetime. This was called the Lifetime Allowance (LTA); exceeding it meant paying a tax charge. This has opened up different opportunities for different clients. Should I restart contributions? If you have stopped contributing to
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Lifetime allowance abolished From April 2023, the Lifetime Allowance (LTA) is going away. This means that people can save as much as they want in pensions for their lifetime. There is still a limit on how much tax-free cash you can take out. You can take out up to 25% of your pension savings tax-free,
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Starting from 6 April 2023, the rules for filling in gaps in your National Insurance contributions (NICs) record, which affects the amount of state pension you can receive, will change. You need at least ten years of NICs to receive any state pension and 35 years to get the full amount. People can fill gaps in
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In May, the Institute for Fiscal Studies released one of the first pieces of academic research into the spending of British retirees. The report looked at changes in spending throughout retirement over time. Perhaps the most important conclusion is that those who have not yet retired shouldn’t expect their overall spending to fall sharply during
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LCP, a pensions consultancy that counts former pensions minister Sir Steve Webb amongst its employees, has published a guide looking at the pros and cons of someone combining all their pensions in one pot. To a certain extent, the guide is aimed at those looking to consolidate their workplace pensions, but the points covered can
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Voluntary National Insurance contributions can help ensure you have enough qualifying years to get the full State Pension. If you have gaps in your record, you might be able to make voluntary contributions to fill them. In the past, you have only been able to fill the last six tax years. However, when the Government
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New research [1] has exposed the staggering impact of the gender pension gap. The study shows that women have smaller pension pot sizes in every age bracket, and the situation worsens the closer retirement gets. Worryingly, women, on average, retire with less than half the income of men. Reduction in amounts paid into pensions The amount
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When looking at the Lifetime Allowance things are not as simple as they seem. The case study below looks at some of the things to consider. Mr Bloggs is a 57-year-old consultant surgeon with the NHS. His wife is 52 years old and works for a pharmaceutical company, although she also worked within the NHS.
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Using pension drawdown in retirement offers lots of flexibility and the potential to keep your pension growing. However, the tax on pension drawdown can get very messy. In many cases, HMRC tax the first pension drawdown payment incorrectly. Having to sort this out can kick start months of toing and froing with HM Revenue and
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Inheriting a sizeable pension can dramatically alter a lot of financial plans. So how should someone make sense of the options available and use this money wisely? What is an inherited pension? When someone dies with money in a pension pot, this will usually pass down to whoever they have nominated to receive it. Wills
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A recent study promoting buying annuities has received some attention in the press. An annuity is where you exchange some or all the money in your pension for an income. The company you buy it off will pay this income for as long as you live. You can also have the income linked to inflation
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If you are a higher or additional rate taxpayer, there is a simple way to avoid HMRC “taking” as much tax from you. This is claiming the tax relief you are eligible for on your pension contributions. Despite this being free money, research published in Pensions Age revealed thousands of people do not claim their extra
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The State Pension is a vital source of income for millions of retired people across Britain. If you are looking to get more income in retirement, a good place to start is with your State Pension. It is important to know how the system, which can be complex, works. If you are not receiving the
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Following the release of the September inflation figures the increases in the State Pension from April 2022 can be calculated The State Pension and new State Pension are usually increased each April by the “Triple Lock” which is the higher of: Annual CPI from the September before the increase; 3-month average wage growth to July
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We are committed to helping our clients better appreciate the value and benefits of financial planning. One of the ways we do this is by using lifetime financial forecasting, which we also refer to as cash-flow modelling. This enables us to help our clients understand their financial planning needs better. This is because it allows
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In September 2020, annual inflation in the UK was running at 0.5% on the CPI measure and 1.1% using the old RPI yardstick. At the time price rises were the least of our worries. 12 months later and inflation has become a hot topic. The latest (August) figures are 3.2% CPI and 4.8% RPI. The
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Those in control of how to extract money from their business broadly have three main options. These are to take out the money either as salary, dividends or by making employer pension contributions. The Health and Social Care Levy and the increase in dividend tax rates both make the extraction of profits via pension contributions
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The University of Manchester Research has published a report entitled: Pensions and Divorce: Exploratory Analysis of Quantitative Data. The report has found that, within couples, men have substantially more private pension wealth than women. This poses challenges should they divorce. The researchers looked at the pension wealth of almost 30,000 people over the age of
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Since 6 April 2010, the personal allowance is reduced by £1 for every £2 of income above £100,000. Since then, the personal allowance has almost doubled. It was £6,475 in 2010/11 and now stands at £12,570 in the tax year 2021/22. Income at this level is formally taxed at 40%. However, the fact that anyone
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It has become common practice for employees to exchange part of their salary and/or bonus in return for their increasing the pension contribution they pay by the same amount. This can be far more attractive than the employee making a direct pension contribution on his/her own behalf, particularly if the employer is prepared to increase
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The Institute for Fiscal Studies has released a report looking at when might be the best times for individuals to save for retirement. The findings are obviously very general but some chime in with what we find from our clients and our personal finances. What have the IFS said? Most individuals expect their income to
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Standard Life Aberdeen (SLA) has just published ‘The Class of 2021’. This looked at 2,000 UK adults who were either due to retire in the next 12 months or had retired in the past 12 months. The document contains some interesting hard data alongside some softer marketing material. What stands out? The average retirement was
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You can save as much as you want into your pension subject to certain limits. One of these is the Lifetime Allowance (LTA) and exceeding it can cause tax charges. What is the lifetime allowance? If the value of your pension exceeds the LTA, you will pay a tax charge, known as the Lifetime Allowance
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In the March 2021 Spring Budget, the Chancellor confirmed that the Lifetime Allowance (LTA) will be frozen at £1,073,100 until April 2026. The LTA was planned to increase by CPI each year as it has done since 2018/2019. The annual increases now won’t take place until at least April 2026. The change has little immediate
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Around three in four people risk outliving their savings in retirement, a report looking into the impact of the pension freedoms indicates. The research found evidence many retirees risk potentially running their pension savings down. It termed this as “sleepwalking into retirement”. The study examined retirement planning and spending habits following the introduction of pension
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Buried amongst the other announcements made on 25 November was a paper from the Treasury looking at measures of inflation. It revealed a decision about replacing the Retail Prices Index (RPI) with the Consumer Prices Index (CPI) including owner-occupied housing costs (CPIH). The RPI has not been an official National Statistic since 2013 because of serious deficiencies
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All registered pension schemes can (in theory at least) invest in property, including land, either in the UK or overseas. Pension schemes can invest directly in commercial property, but many choose to invest indirectly using pooled vehicles. These include unit trusts, open-ended investment companies (OEICs) or real estate investment trusts (REITs). As well as allowing
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A new report from the Institute of Fiscal Studies (IFS) has shown pension saving has crashed among the self-employed. What does it say? Back in 1998, just below half (48%) of the self-employed paid into a private pension. By 2018 this had plummeted to just 16%. The contrast with regular employees, because of auto-enrolment, is
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NHS Pensions Savings Statements are prompting enquiries on annual allowance charges. Here is a reminder of the special provisions that apply to annual allowance charges of NHS clinicians in England and Wales for the 2019/20 tax year. Many will have recently received Pensions Savings Statements for tax year 2019/20 and may have questions about their annual
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The Government has rejected the Public Accounts Committee (PAC)’s proposal that HMRC should evaluate pensions tax relief. The concern was HRMC did not understand the impact of some of the UK’s largest tax reliefs which includes pension tax relief. The committee called for a formal review, but the Government disagreed. They pointed to several recent consultations
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The Institute for Fiscal Studies the effect of the pandemic on those nearing the end of their working lives. In a new Briefing Note, the IFS investigated how workers aged 50 and over have reacted to the pandemic. This has included how their retirement plans have already been affected by the crisis. What were the findings?
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The Money & Pensions Service (MaPS) has undertaken some research among people aged 50-70 with some pension savings besides the State Pension. The results make disturbing reading: 37% of over 50s are leaving their retirement financial planning until their final two years before retirement or won’t prepare at all 35% of retirees said they left financial
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A report claimed thousands of older women have not received their full state pension entitlement. In a follow-up report, Lane Clark Peacock LLP (LCP) summarizes their findings since then. A vital message is to encourage a much wider group of women to check their state pension is correct. Dozens of women have told LCP they
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There are many benefits of turning using a financial planner. Financial planners have the expertise to advise on how best to achieve your goals. They can play a role in deciding where to invest your money to ensure it is working hard in pursuit of your ambitions. You are bound to think about how safe
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A report on the front page of Wednesday’s Financial Times has added weight to the possibility. It has highlighted a quirk of the calculation which could cost the Government dearly if no changes are made. To understand why we need to understand the fundamentals of the Triple Lock. The increase each April is the greater
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Deferring the state pension is the default option. If you do not claim it the Government will not pay it to you. For a lot of people, this might be a better option for them. Of course, you need to think about how long you defer for too. Factors to consider As with all pension
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MIT AgeLab has identified three simple questions to ask yourself to gauge how prepared you are for retirement. They uncover crucial factors which may determine your future quality of life. When it comes to retirement planning, we are inclined to focus on accumulating wealth and spending it wisely. While not outliving our wealth is essential
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The research on how best to generate retirement income has been evolving for decades. In the 1950s and 1960s, the leading strategy was to buy bonds live off the interest. This prevailed until the high inflation of the 1970s ravaged the true value of bond interest. In the 1980s, retirees shifted to buying dividend-paying shares
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The Lifetime Allowance (LTA) limits how much someone can draw from their pensions without incurring tax charges. It currently stands at £1,073,100 (2020/21). Lifetime allowance charges can arise on various occasions with the main ones being: When benefits are initially taken (Taking tax-free cash from a pension is an example of this), On the death
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The Government introduced personal pensions in 1988. This allowed the self-employed or employees of companies not offering a pension scheme to have a pension. They are money purchase schemes where contributions receive tax relief. Pensions underwent a radical change from 6th April 2006 with the introduction of Pensions Simplification and the March 2014 Budget announced
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Everything that goes into growing the money in an investment plan or pension involves time and money. You should expect to pay a reasonable level of charges. These charges do reduce growth. Let us use an example where the underlying investments within a plan grew by 5% before charges. If charges were 1%, they would
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As you might imagine, this is a question clients ask us often. A rule of thumb is the “4% rule”. This means on a £100,000 pot you would withdraw £4,000 and increase the withdrawals each year with inflation. Taking any more runs the risk of the pot dwindling and running dry within 30 years. We
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When taking an income from your pension pot, you will start with two choices. Do you want to hand over your money to an insurance company and they will pay you an income for the rest of your life? Or do you want to keep a pot of money from which you decide how much
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On Friday 7th February, the House of Commons Library (HoCL) issued a briefing paper entitled ‘Reform of Pension Tax Relief’. The following day the front page of the Financial Times (FT) ran a headline “Javid eyes tax raid on high earners”. The article suggested restricting tax relief on contributions to 20% could “raise more than
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Divorce is one of the most difficult subjects to talk about. The emotional upheaval of divorce can be difficult to deal with. So too can the financial implications. When relationships end, there are so many things to consider. Children, home, and support are the first things you focus on. When you begin the process of
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Doing the right thing with your pensions is not always easy but it has become much harder for members of the NHS pension scheme. Many have incurred tax bills through no fault of their own. Some are opting out of their pension schemes altogether to avoid tax. Giving up the lucrative benefits afforded by the
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Lifetime financial planning done correctly has to include a fluid financial forecast created using sophisticated planning software. We take a snapshot of your financial situation and project this forward year by year. The process is only as comprehensive as the information we put into it. The more information we put in, the better the output. The
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