It’s true that pensions
aren’t the most exciting of topics, but unless you’re planning to work for ever and
never retire, you might want to give them some time. Being self-employed is very demanding, so as you get older you may see yourself winding down, and taking a bit more time out. If this sounds like you then you need to start planning and saving for the lifestyle you want in the future.
Paying into a pension is a great way to get saving towards your future relaxing lifestyle. If you're a director, you can make company contributions, which could reduce the company tax bill, or anyone can pay the contributions personally and the tax man will pay tax relief on top – turning a personal contribution from you of £80, into a gross contribution of £100 (for a basic rate tax payer).
Basically, pensions fall into three main categories: State Pensions, Occupational Pension and Individual Pensions. It is important to know what pensions you already have and have an idea of what they are likely to pay you once you retire. Like any form of savings, pensions need to be regularly reviewed. As you approach retirement, you’ll need to check your personal, company and State pensions. You must make sure you have enough income to provide for your needs in the future.
Provided you have enough “qualifying years” (currently
set at 35 years) the new flat rate State Pension came into effect for
those retiring after 6th April 2016.
The full new State Pension is £159.55 per week, but the actual amount you will receive depends upon your National Insurance record.
This is a pension scheme set up by an employer for the benefit of the employees. In a “contributory scheme” both the employer and employee contribute to a fund which grows free of tax during the savings period. In a “non-contributory scheme”, only the employer contributes.
A Personal Pension is an individual investment policy, that has the benefit of added tax relief on personal contributions. The main purpose of this type of plan is to build up a “pot” of savings, to draw from when you retire. Benefits can be taken at any time after age 55 if the plan rules allow or sometimes earlier, if ill health is a factor.
It is usual for these
types of plans to allow 25% of the “pot” to be taken as a tax-free cash sum,
although this is based on current legislation, and may change in the future.
You can make a real difference to your future by starting and maintaining a pension. We can help you to find out how they work, what your choices are, and how much you might want to save.
We can help you get the most out of your pension(s) by:
Semplo is a trading style of Palm Financial Care Limited