Independent Pension Advice

Getting good quality, independent pension advice and starting a pension doesn’t need to be complicated.

It’s your retirement fund and you’re in control. However, with all pensions, it’s best to start as early as you can and save hard. Most pensions are flexible and let you choose the most suitable way to invest your money so it has the chance to grow; and every time you pay money in, the taxman pays in too.

Matrix Capital has two Chartered Financial Planners, Gary Matthews and Robin Melley, who offer a pension advisory service to help guide you through the process.

A competent pension consultant will not only explain the benefits but will also ensure that you understand the restrictions and possible downsides – after all, pensions are one of a number of ways in which you are able to save for your retirement.

Tax is a big driver for saving into a pension

First of all, within certain parameters, you get tax relief on contributions that you make to your pension plan. For example, for a basic rate tax payer paying £200 per month into a pension plan tax relief of £50 per month is triggered. In other words, if you invest £200 the taxman invests £50 into your pension plan, which means that you actually receive £250 into your pension pot.

For higher and additional rate tax payers, additional tax relief is given so that you end up with 40% or 50% tax relief on money paid into the pension. As an aside, people earning over £100,000 that have lost their personal allowance are paying an effective rate of income tax at 60% – so making a pension contribution may actually attract an effective rate of relief of 60%!

As ever, professional pension advice from a properly qualified pension consultant pays real dividends for people who are serious about saving for retirement. Seek out a Chartered Financial Planner that offers an unbiased pension advisory service.

The next tax benefit is the way in which the funds held within your pension plan are treated.

All of the growth on the assets within your pension plan are free of tax and all of the income earned on the investments held in your pension are free of tax – with one exception, which Gordon Brown imposed when New Labour won the general election in 1997, which is that dividend income on UK equities are now taxed. Thank you Gordon!

Nevertheless, the funds in your pension grow in a very tax-efficient manner when compared with most other mainstream investment wrappers.

The third main tax benefit is that when you retire and ‘crystallise’ your pension benefits, you are able to take a lump sum (which is now called a Pension Crystallisation Lump Sum!) out of your pension fund without creating a tax liability. The rules allow you to take 25% of the value of your fund from aged 55 years onwards and not pay tax on the amount received.

You can of course take less than 25% of your fund as a lump sum. In some circumstances, it is possible to take more than 25% – this is one of the areas where you will really value independent pension advice from a suitably qualified pension consultant offering a pension advisory service.