Pensions have seen an unprecedented number of changes over the last few years, leading to an almost weekly place amongst the news columns. Changes in terminology and legislation surrounding the various type of pensions can lead to confusion and uncertainty as to what is the right thing to do.

Let’s consider some of the current key topics that may affect your retirement plans:

State Pension Age – As the average life expectancy has increased over the years, the government has pushed the date we will receive our state pension further back. This can create problems for anyone wanting to retire early – with the very real threat of having to work for longer or cutting back on the things they hoped to do in retirement.

Defined Benefit Transfer Values – Members of these pension schemes are seeing historically high transfer values. These, of course, can be very tempting – especially with the increased flexibility available in other types of pensions – but what are they giving up in return? The benefits of a guaranteed income for life should not be taken lightly. It requires careful analysis by experts in this highly-complex area.

Annuity vs. Drawdown – Another key issue is, when approaching retirement, knowing what the most appropriate solution will be to ensure you have the standard of living you desire during your retirement.

Pension Gap – With the demise of defined benefit pensions in the workplace there are large numbers of people in real danger of having insufficient pension provision to fund their retirement. The introduction of auto-enrolment has reintroduced a requirement for your employer to provide you with a pension and for you both to make contributions. However, with the current minimum contribution of only 2% of your salary; is this really going to provide you with enough retirement income? You may, of course, pay more.


Perceptions of pensions can often be negative; however, this may be born of rumour and hearsay rather than facts. Pensions form an essential part of your savings and investment portfolio. The benefits of tax relief on contributions into the pension should not be overlooked – for every £100 into pensions a basic rate taxpayer only pays £80; that’s a 25% gain right from day one. For higher rate taxpayers, the numbers are even better with an extra £20 relief to achieve the same figure, Combined with tax free growth akin to an ISA, and the potential for up to 25% of the whole fund as a tax-free lump sum at retirement; utilised correctly pensions can be essential for planning for the future. They can even be used as legacy planning for the beneficiaries of your estate.

Without doubt, the best thing you can do is speak to an expert to receive advice that’s tailored to your needs. Independent Financial Advisers are qualified and experienced in dealing with situations just like yours; they will assess your current provisions and make a personalised recommendation to improve your financial position.

A recent survey by the International Longevity Centre – UK (ILC-UK), has highlighted the fact that people who take financial advice are on average £40,000 better off. Can you afford not to seek advice?

Please note that the value of investments can go down as well as up and you may not get back all of your original investment.

Call your local Area Adviser

John Varley

01522 43 73 50


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