Retirement Planning
Pre-retirement Planning
Self Invested Personal Pensions (SIPPs)
A SIPP is a personal pension that allows you to have access to a wider choice of investments when it comes to saving for your retirement.
With a SIPP all types of permitted investment can be held under one portfolio. As a result it is not necessary to hold a number of different personal pension plans to achieve a wide investment spread.
In other words, a SIPP can give you more choice, better control and greater flexibility when it comes to investing for your retirement.
Brewin Dolphin Ltd. offers a comprehensive service in respect of Self-Invested Personal Pensions (SIPPs). We recognise the importance of SIPPs and the significant advantages that they can bring over other types of pension schemes.
For more information regarding SIPPs please see our SIPP brochure or contact one of our advisers.
We recommend contact us for advice before applying for a SIPP.
The tax treatment and tax benefits of the products outlined above are based on current legislation and are subject to change.
The value of your investment within your SIPP, and any income from It, can go down and you may get back less than you invested.
Stakeholder Pensions
Stakeholder pensions are designed for people without access to employer sponsored pension arrangements. They are secure, flexible and offer value for money.
There is no limit to the amount that can be invested in a stakeholder pension scheme. However, tax relief can only be obtained on contributions up to the level of a person's salary (subject to an annual limit of £235,000 for the tax year 2008/09). It is possible to contribute up to £3,600 per year (including tax relief) into a stakeholder pension scheme even if a person is not earning.
A member of an occupational pension scheme may also contribute to a stakeholder pension scheme
Post-retirement Planning
Pension Annuities
An annuity is a product sold by insurance companies. It is a way of converting a lump sum, usually a pension fund built up during your working life, into a regular income.
Compulsory purchase annuities are bought with a payment from an employer's pension scheme or personal pension fund. Part of the fund may be paid out as tax-free cash; the remainder must be used to buy an annuity.
The income payments (usually monthly) from this type of annuity are taxed as earned income and are usually paid to the beneficiary net of basic rate tax. Higher rate taxpayers may be liable for additional tax which at present has to be collected separately.
An annuity is a long term investment as it cannot be cancelled or transferred to another provider once set up. Annuities may have cancellation rights but these are only available for a limited period. Annuity Rates do fluctuate and you need to be sure that you are purchasing an annuity at the right time.
Please contact us for advice on the most appropriate type of income in retirement; the most appropriate annuity and the most competitive rate. We recommend you always seek professional advice before purchasing an annuity.
The tax treatment and tax benefits of the products outlined above are based on current legislation and are subject to change.
Pension Fund Income Withdrawal
Unsecured Income and Alternatively Secured Pension (ASP)
On reaching minimum retirement age you can begin taking benefits from your SIPP either by purchasing an annuity or drawing an income from your fund called
Unsecured Income. This is a flexible way of taking benefits from your SIPP without buying an annuity because:
- the level of income can be varied
- you can defer purchase of an annuity
- you can decide to purchase an annuity at any stage.
- your fund stays invested while you can draw an income
Generally you can start taking income from age 50. The minimum age will rise to 55 with effect from 6 April 2010. You can take a tax free lump sum at the start and the remainder of your fund stays within your SIPP; you can then receive an income from your SIPP. This means you can defer the purchase of an annuity on the open market to suit your circumstances or to take advantage of a rise in interest rates. The recent legislation also allows you to not take an income should this be suitable.
The tax-free lump sum is 25% of your fund.
You retain investment control of the remainder of your fund so your investment manager can continue to invest your SIPP as you wish.
When you reach age 75 you have two options; purchase an Annuity or take Alternatively Secured Pension (ASP). ASP gives you the same flexibility as Unsecured Income mentioned above. The maximum income allowed is 90% of the comparable annuity income payable as at age 75.The minimum income is now to be 55% of the equivalent annuity rate at age 75.
Please note ASP is only available at age 75, if you do not elect to take ASP you must purchase an Annuity.
You can continue ASP, if you wish, until your death or buy an annuity at any time before then.
We strongly recommend you seek professional advice before deciding on the most appropriate type of income in retirement.
The tax treatment and tax benefits of the products outlined above are based on current tax legislation and are subject to change.