5 Important Pension Rules
These rules could affect how much money you have when you come to retire, so review your pension today.
Avoid Excessive Charges
Regardless of who your pension is with, there will always be some form of charge. Some companies take a much higher charge than others which can massively effect the amount that will be available for you in retirement. For example 13% of your pension savings would be lost wit h a 0.5% annual charge, this increases to a whopping 34% with an annual charge of 1.5%.
Therefore you could significantly increase the size of your pension pot at retirement by simply moving to a lower charged plan. It is extremely important, therefore that you have a review with an independent pension advisor to see whether you could benefit from switching your pension to a lower charged pension plan.
- Investment growth of 7.00%
- Individual saves from 22 years to State Pension age (Spa) of 68
- Initial annual contribution
- Annual contributions growth 4.00%
Only get advice you can trust
The pensions regulator is very concerned about unscrupulous and unregulated firms who can target your lifetime’s pension savings. This is why Bernard Scott only works with companies that are regulated by the Financial Conduct Authority (FCA). Any regulated firm will have a six digit FCA number.
If at any time your are unsure about whether a company is regulated or not, you can check quickly and easily on the FCA’s register, just go to https://register.fca.org.uk
Don’t get caught
Pensions can be a boring subject, but it’s no secret that the sooner you start thinking about your retirement income the better. Thankfully no matter how old your are there could be things that can potentially make your pensions work harder as long as you are not already drawing on your pension.
Firstly you need to get all the information you have regarding your existing pensions. Remember it’s important to track down any pensions that you have not heard from for a while. If you have moved address the pension company may not have your correct details and this could make it difficult to claim on once you retire.
Next you need to have a regulated pensions advisor review your information to ensure you pension is in the best place possible. If not they will advise you of the best possible course of action.
Finally, contribute more into your pension. The more you contribute now, the more you will have when you come to retire, you could be amazed by how much your pension can grow by.
Trust the Tax man
Now there’s a phrase I didn’t think we’d say. In fact in terms of pensions the Tax man really is your friend, for the following reasons;
- You may avoid death tax on your pension funds. Under new rules there are some circumstances where you can pass your pension savings on to a beneficiary free of inheritance tax.
- The returns from your pension savings grow tax free within your pension, this means that savings should grow faster than would be the case outside your pension.
- You can take 25% of your pension funds as a tax free lump sum from the age of 55.
A wide number of rules and regulations apply to the tax treatment of pensions so be sure you contact a regulated pension advisor
The Tax man will give you tax relief on any savings you put into a pension.
Review your pensions on a regular basis
As we have said, changes now could have a huge effect on the money that is available for you in later life. Therefore it makes sense to ensure that your pension is performing at the best possible level. What is good for you now might not be the case in a few years time. We would recommend that you have your pension formerly reviewed every twelve months.
Rule2 highlighted the importance of ensuring your advisor is regulated by the Financial Conduct Authority (FCA). However there are other things to consider such as:
Will they provide you with a no obligatory free pension review?
Will they consider the whole of market?