“The general Government gross debt was £1.763 billion at the end of the financial year ending March 2018. This is equivalent to 85.8% of gross domestic product (GDP) and 25.8% points above the reference value of 60% set out in the Protocol on the Excessive Debt Procedure”.
This popular bumper sticker remains true when we consider how many individuals continue to pay tax during their so called retirement. Indeed, almost 7 million pensioners have an average annual tax bill of £3,500 with the total tax paid reaching £24 billion (2015/16 tax year).
I have heard about options for keeping my pension benefits flexible. How would this work?
The traditional method of drawing pension benefits is by-way-of annuity purchase which means that you give up your capital sum for a guarantee of an annual income for the rest of your life. With the advent of income drawdown and the latest version known as Flexi-access drawdown (FAD), you can retain your capital sum and instead invest this to achieve an investment return. A regular income can be paid from these monies and providing the investment return is sufficient, the pension pot can be maintained or even increased. This option allows flexibility over the level of income paid with potential for any residue monies to be available on death.
Business owners should investigate switching death-in-service policies for relevant life policies. We outline the benefits, including tax advantages and portability, which make the policy such an attractive consideration.
The ages whereby individuals can start to draw their state pension have changed and women in particular are affected. A woman born after March 1955 will now need to wait until she is 66 before receiving a benefit and if she is aged 46 or under, she will now have to wait until her 67th birthday.
The introduction of new pension freedoms in 2015 and economic conditions that have propelled transfer values higher over the last few years have combined to encourage more of us to consider the transfer of our often fated ‘gold plated’ Final Salary Pension Schemes.
Whilst most of us are aware of the need to save monies on a regular basis for when we retire, for those who have their own businesses and who utilise commercial property, pensions can be a very sophisticated and useful vehicle.