We all have an idea of when we would like to retire and what we would like to do during this time in our lives. But, as with everything, to enjoy the standard of living we would expect it’s important that we take the right steps now to ensure that we don’t have to worry when the time arrives. Having worked hard for a living, retirement is the time to sit back and relax.

What are the advantages of pension planning?

Putting what is said above aside, there are many benefits of pension planning and the main ones being:

Income tax rebates - you receive an income tax rebate on contributions made (non-taxpayers enjoy a 22% tax rebate for contributions up to £3,600 gross p.a.)

Tax-free growth - investments held within your pension grow tax-free

Pension commencement lump-sum - when you retire you can take up to 25% of your fund as a tax-free lump-sum.

Competitive costs - although traditionally expensive, the introduction of Stakeholder pensions has driven down costs significantly, making many pensions a cost effective way to save

Discipline - because your savings are locked away until at least age 50 (rising to age 55 from 2010), it removes the temptation to spend the money before then!

Investment choice - pensions allow a wide range of investments to be held, and this has widened further from April 2006 when the pension simplification bill was introduced.

What are the disadvantages?

It’s also worth thinking about the disadvantages of pension planning which are as follows:

Inflexibility - your investment is locked away until at least your 50th (rising to 55th from 2010) birthday.

Pension income is taxable - although pensions grow tax-free, when you eventually retire the income paid will be taxable.

Skipton Financial Services can help you plan for your retirement and will only recommend options that are suitable for your individual circumstances. Simply call us on 0800 137 832 for more information.

 

 

 

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Work out how much retirement income you may receive from your personal pensions.

Our simple guide will help you find out how Skipton Financial Services could help you plan for retirement.

To find out more about any of
the services we’ve mentioned
simply:

• Contact your SFS Financial Adviser
• Call a member of our Client
  Help Line on 0800 137 832
• Visit your local Skipton
  Building Society branch to
  arrange an appointment with
  an SFS Adviser

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