“The pensions market is changing, and the onus is more and more on the individual to sort out their own retirement planning. No longer can we depend solely on the state, or our employer.”
Gareth Flanagan, Principle First Financial Services
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Personal Pension / Private Pensions
Given the relatively unimpressive buying power of the basic state pension, and the increasing trend among employers to dismantle their own pensions commitment for employees, a personal pension has become the option of choice for many in recent years. While there are various types of personal or private pension, they generally offer access to a wider range of underlying investments than the simpler stakeholder model, and charge a higher fee.
Savings into a personal pension attract tax relief from government equivalent to the rate of tax that is applied to your wage. If you pay tax at the basic rate of 20%, every £80 you save into your personal pension will attract £20 in tax relief.
By taking personal pension advice from a qualified adviser, you can set retirement goals based on the income you would like to achieve from your personal pension, and also set a target for your ‘buying power’ in retirement by comparing your targets to the Retail Price Index (RPI), which reflects the rising costs of goods and retail prices.
Click here now for Pensions advice or call 0800 678 5929
In the pensions sector, clients taking personal pension advice often ask how much they should save into a personal pension at any given stage of their life. As a general rule of thumb, pensions contributions should increase with the years, as falling payments on your mortgage and rising income from an increasing salary may well generate more disposable income than before. Some pensions advisers suggest taking your age, halving it, and using the resulting figure as a percentage of salary. A person of 40, for example, might wish to consider investing 20% of their salary in their personal pension.
