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How should you prepare for retirement?

Are you saving enough for the retirement you want? Get informed on the latest pension information and learn how to generate a retirement income.
Request a call back Guide to saving for retirement

Getting pension ready

Almost everyone considers a comfortable retirement as one of their main financial goals, and contributing to a pension is one way you can achieve that. It helps to think about what you want to achieve with your savings – and how much you will need to retire.

Do your pensions research

There’s a lot to think about with pensions and the tax reliefs that are available to you. That’s why we put together a comprehensive Guide to Pensions & Retirement, with top tips from personal finance experts. Download the guide today and find out:

  • How pension tax relief works
  • Ways to contribute
  • UK pension limits
  • The differences between a pension and an ISA

Calculate how much you’ll need to retire

When it comes to planning your retirement, you can’t afford to leave anything to chance. Use our pension contribution calculator to understand how much money you’re likely to have for your retirement. You’ll learn:

  • An estimate of your total pension fund
  • Any shortfall (money you’ll need to reach your desired amount)
  • Your withdrawal breakdown over time

Consider retirement advice

Your retirement could extend for several decades. Therefore, the earlier you start preparing, the more likely you are to reach your retirement goals. Speaking to an expert could provide valuable insights into:

  • Your probable year-by-year spending needs
  • The options available for generating income
  • How you could take that income in the most tax-efficient way

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What is a pension?

A pension is an income you receive once you have stopped working; but not everyone is aware of the various pension types available to them.

The State Pension

Providing regular payments from the government, the State Pension you get will depend on your National Insurance records and typically varies from person to person. The current state pension age is 66, set to eventually rise to 68. It’s important to note this is different from your retirement age, which can come earlier depending on your financial situation.

Workplace pensions

A percentage of your weekly, fortnightly, or monthly salary is deducted as a pension contribution. Your employer will also pay into your workplace pension, often matching your contribution to a certain limit. Depending on the type of pension scheme, you can convert your savings to a regular income or withdraw lump sums.

Personal pensions

Also known as private or personal contribution pensions. These are tax-efficient savings accounts that allow you to make additional savings towards your retirement. You can select all the investments yourself or with professional support. Personal pensions often provide greater flexibility over how and where you invest, and when you can access your savings.

What do you do with multiple pensions?

The days of having a job for life are long gone and we can expect to work for 10 or more companies before retiring. That’s a lot of pensions to keep track of. Bringing multiple pensions pots all together can make things simpler to administer and stay on top of.

Defined contribution schemes

If your pension(s) are defined contribution schemes (also called money purchase schemes), there are several options for you. You could transfer or consolidate your pensions into a SIPP (Self-Invested Personal Pension), your current workplace scheme, or another personal pension.

The value of advice

When consolidating pensions, you'll want to choose the best option to hold your retirement savings. This involves checking out the fees and charges, different investment strategies, and any special features such as guaranteed rate of annual income. That’s why we recommend taking financial advice before deciding on any action.

Preparing for retirement

Your tax-free pension allowance

Under-75s with relevant UK earnings can currently claim tax relief on contributions to a personal pension within the annual allowance. Paying into a pension can be a simple way to reduce your income tax bill for the year.

The tax treatment of pensions depends on individual circumstances and may be subject to change in future. It is always recommended that you seek advice from a suitably qualified investment professional if you have any doubt as to the suitability of a pension and/or the underlying investments. You should be aware that Stakeholder Pension Schemes are generally available and might meet your needs as well as a SIPP. Please remember the value of investments may fall as well as rise and your capital is at risk.

How we can help you save for retirement

Whether you’re looking to open a new pension or get looking for help and advice for your retirement, we have several options to help you. With over 200 years' experience, we have created financial security for tens of thousands of our clients.

Save

Account Options

To make sure your money is in the right account for you, we offer a wide range of account options.

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Plan

Planning Services

Whether you have a specific question about your finances or looking for someone to help you create a holistic financial plan, we can help you create a more secure financial future.

  • Financial Planning to build you a financial plan that’s specifically designed to meet your needs.
  • One Step Financial Plans provide guidance and streamlined advice around a commonly asked financial question for people with non-complex needs.
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Invest

Investment Services

We provide a wide range of investment services suited to your different needs, offering flexibility and choice so you can be involved as much or as little as you like with your investments.

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Frequently asked questions

The allowance for most people in the current tax year is £60,000, with personal contributions capped at 100% of earnings for the purposes of tax relief. For people who have taken more than their 25% tax-free lump sum or those with earnings and benefits of more than £260,000, there is a £10,000 limit. These apply across all your pensions and not per pension pot.

You can’t transfer your current workplace pension to a SIPP, but you can certainly transfer out from defined contribution schemes you are no longer contributing to. There is one exception to this general rule: you cannot transfer out of a workplace pension scheme provided by NEST. But as explained above there are pros and cons you need to consider first. It is also not advisable to transfer out of a defined benefit scheme and many SIPP providers won’t accept the transfers.

You can start accessing some workplace and most personal pension schemes from the age of 55, although this will rise to 57 by 2028, and may rise further in line with increases in the State Pension Age.

There are two main options: Continue investing and take out money from your pot as and when needed (or “drawdown”) or buy an annuity that pays a guaranteed regular income for life. You can also take it all as cash, but this may be unwise for tax reasons.

Yes, but how you take your pension needs careful consideration. Remember, income from employment or self-employment is taxable, as is your pension income or withdrawals in excess of the first 25% lump sum, so keep an eye on your total earnings each year.

Request a call back

Get a better understanding of your current situation and the options available to you, speak with an expert local to you.

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