claire davies bjc on retirement planning

7/22/2019 Claire Davies BJC on Retirement Planning

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Claire Davies



The benefits of pension schemes in saving

for retirement

What tax relief means and how to benefit

from full relief

Types of pensions available to you

Considerations in taking pension benefits

Why you need to start saving for yourretirement now



Income tax relief on contributions

Investments/Savings grow free from CGT

and income tax liability

Death benefits for your spouse & family

25% tax free lump sum on retirement

Benefits cannot be taken until age 55

Provides you with a fund for the purpose ofannuity purchase / retirement income



There are two methods of claiming tax relief:

Net Pay Method

Employer Schemes – payroll deduction

Contributions from gross salaryNo further action required to claim tax relief

Relief at Source

Personal Contributions – net salaryBasic Rate tax claimed back from HMRC

Complete tax return to claim back higher rates



Jane and Amy wish to make a £100 gross contribution to

their personal pensions and gain full relief: Jane is a Basic Rate Taxpayer:

£100 x 80% = £80 net contribution

£80 is 80% of £100, so she has received tax relief of 20%

Amy is a Higher Rate Taxpayer:

£100 x 80% = £80 net contribution

She is entitled to higher rate tax relief of a further 20%

£100 x 20% = £20 £100 gross pension contribution has cost Amy

£80 - £20 = £60

£60 is 60% of £100, so she has received tax relief of 40%



Pension contributions are unlimited

You can only claim tax relief on the higher of: £3,600

100% of UK earnings capped at £50,000**Reducing to £40,000 from April 2014

Carry Forward Relief



Flat rate State Pension of £145.40 per

week - £7,560.80 per annum

35 years of National Insurance or credits to

be paid

State pension age will be increased to 67by 2028



Defined Benefit – ‘Final Salary’

Income based upon – final salary and

length of service

Liability on Company NOT individual

Defined Contribution – ‘Money Purchase’

Income based upon – amount contributedand investment growth

Liability on individual



Choosing a scheme Investment choice & performanceFinancial StrengthChargesQuality of Service

Stakeholder:Minimum contribution: £20 Annual Charges: 1.5% for 10 years; 1% for remainder

Self Invested Personal Pensions (SIPP)Greater Investment ChoiceDrawdown ArrangementCharges are higher



25% Tax Free Cash Lump Sum

Income is Taxable

Savings in excess of Lifetime Allowance taxed at 55%

Annuity Purchase:Open Market OptionVarious Options – Level, Linked, Spouse Pension, GuaranteesEnhanced

DrawdownRemain InvestedMaximum Income reviewed triennially



55% of UK population do not have adequatesavings for retirement

20% of UK population are not saving

54% of men under the age of 50 haveinadequate retirement savings

64% of women under the age of 50 haveinadequate retirement savings

Average person saves £190 per month



Current Age Annual Pension in

retirement (age 65) if

saving £200 per month

Annual Pension in retirement

(age 65) if saving £300 per

month

20 £12,480 £18,720

25 £10,140 £15,120

30 £8,136 £12,120

35 £6,408 £9,612

40 £4,920 £7,380

claire davies bjc on retirement planning

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