Personal Pension Plans

State pension provision is being cut back as the cost escalates.  With people living longer, opting to retire earlier and the closure of many Employer's Occupational Pension Schemes, inadequate pension provision is set to become an issue for more and more people.  A Personal Pension Plan is one of the most tax efficient ways to build up money to provide you with an income in retirement and the earlier you start saving the longer your money has to grow, providing a larger fund at retirement.

A number of different types of pension plan exist, and you should always seek advice as to which arrangement is suited to your circumstances.

Low Charged/Stakeholder Pensions

From April 2001 you have been able to contribute into Low Charged/Stakeholder Pension Schemes. These schemes have been launched with a view to making the costs associated with pension investment clearer to all.  The maximum charge that can be levied on a stakeholder scheme is 1% per annum, and there are no charges when you invest or transfer out.  Although these contracts offer a simple charging structure they may not be the best solution for all as they offer a limited choice of investment funds.

Self Invested Personal Pensions (SIPPs)

With investors becoming more sophisticated and the relatively high costs associated with some insurance company products being exposed, many clients are looking to take more control of their pension funds.  A SIPP offers the investor the ability to manage his or her own funds or appoint their own fund manager to replace the potentially limited fund management arm of the Insurance company.  Importantly, SIPPs can also borrow money to facilitate the purchase of Commercial property.

PSFM is a specialist in this complex market and has negotiated special terms with a number of SIPP providers.  We also have the ability to design bespoke investment solutions through the Discretionary Fund Manager linked to our group - PSigma Investment Management.

Post Retirement Pensions

If you are under age 75 (or over after April 2006) it is no longer necessary to purchase an annuity the day that you retire. In many cases clients, particularly if retiring early, it could be better for clients to defer annuity purchase and withdraw income directly from their pension fund.

This is known as Income Drawdown and/or Phased Retirement - It is critical to get the investment strategy and level of withdrawals correct to ensure your fund supports you through the whole of your retirement - PSFM has specialist knowledge is this complex area of advice so you can be sure that both you and your dependants will receive the maximum benefits from your hard earned pension funds.

A Personal Pension will provide for a better retirement by offering the following benefits

• Tax efficiency - your payments qualify for income tax relief of up to 40%
• Flexibility - amend you plan as your personal circumstances change
• Choice - you can decide how much and when to contribute
• Peace of mind - Funds accrued can be passed on to your family
• Access to investment expertise - An investment strategy tailored to your risk profile

You will usually get tax relief on your contributions to a Personal Pension scheme.  With a basic rate of income tax of 20 per cent, every £100 that goes into your pension costs you £80 (based on the tax year 2009/10).  If you pay income tax at the higher rate of 40 per cent and have total income under £150,000, you can claim back the tax difference (compared with the basic rate income tax) from the Inland Revenue. So, with the higher rate of income tax at 40 per cent, every £100 that goes into your pension fund costs you £60 (based on the tax year 2009/10).  If you earn above £150,000 you can only claim 40% tax relief on up to £20,000 gross contribution per annum.