Retirement: Pensions

Pension regulation is constantly changing, and there have been several different types of pensions since the 1970's. The most recent major change to legislation came in April 2006 - 'A Day' which was an attempt to simplify pension rules. However, the change in rules, in particular with regard to any legacy policies a client may have where old rules still apply has made an already complicated area even more so.

Further changes are forthcoming following the Pensions Act 2008, which received Royal Assent on 26 November 2008. A large part of the Act focuses on the introduction of the Personal Account - to provide access to pensions to a wider target audience where an employer contribution will be compulsory and members will be automatically enrolled. Previous pension legislation which has been aimed at encouraging private pensions provision has missed the very people it was intended for, and pensions continue to be utilized to their full extent by the more wealthy and high earners. The Pensions Act 2008 also introduces changes to State Pensions, many of the changes will not come into effect until 2012.

Many people have no idea how much they much income they will have or need in retirement - the terminology used is generally unfamiliar, the rules are complex and most people have built up several different pension pots through their career. It is fair to say most people we speak to are confused at best! With people living longer so that it is not unusual to spend a third of your life in retirement it is very important to address you pension planning as soon as possible.

In order to fully assess your pension position and advise you correctly, we initially obtain information on any pension plans you already have. In short we review your existing arrangements to see what they may provide you with, and see if this is likely to meet with your needs and objectives. We then make suitable recommendations as to how you can improve your planning.

There are various different types of pensions - company pension schemes, either defined benefit or money purchase, group personal pensions, stakeholder and personal pensions, Section 32 pensions, AVC schemes, executive pension plans to name but a few.

When you actually reach retirement there are further choices to make on how best to provide your income - if you have a company scheme you may have a scheme pension provided for you and need to select various benefits - widow benefit, guarantee periods etc. You may wish to purchase an annuity or you may like the option of more flexible retirement options such as income withdrawal or phased retirement.

With so much to consider, it is vital you seek expert advice - for a review of your existing pensions and advice on how best to save for retirement or your choices for taking your benefits contact Sheila Tarr IFS on 01489 574355.