Pension Funding
Most people work for several different employers, work for themselves on a self-employed basis, set up their own company or a bewildering mixture of all three during their lifetime.
Some of the areas we address with clients include:
- How much you should be funding towards your retirement, taking into account your other investments and assets.
- Clarifying the timing of your retirement and the sourcing of the income you will need from your pension scheme and other assets.
- Reviewing the make-up of your investment portfolio with your retirement in mind.
How much income we need in retirement is a very difficult question to answer. However, one approach is to start by determining the amount which would be required if retiring today. This figure can then be used to calculate the amount which would need to be saved given certain rates of investment growth, inflation and annuity rates.
The following link gives examples of the amounts which need to be saved to achieve certain levels of income in the future.
The investment profile of a pension fund for a person with 25 years to retirement ought to be very different to that of a person with 5 years left before they retire. The changes in investment structure should be gradually introduced over a period of time.
Ensuring that the funding level is on target and reviewing the investment profile of the pension fund are two reasons why regular annual reviews are held between you and your adviser.
Retirement Solutions
The process of making decisions as to how you wish to structure your retirement income should not begin on the day after you have finished opening your retirement presents.
We recommend that you begin to seriously consider how you wish to structure your affairs at least two years before you retire. This allows you to make decisions without the pressure of an impending deadline.
Some of the options to consider include:
- To what extent will income need to come from a conventional pension fund or are there other assets which can be used as part of the overall income requirement.
- Is a conventional annuity the best way to provide income from a pension fund? If so, what should the structure of that annuity be and how do you obtain the best rates.
- Can an income be drawn directly from the pension fund and is the option suitable for you.
Rensburg Sheppards advise clients on retirement income planning, taking account of all the options available and the pros and cons of each.
The Rensburg Sheppards Premier Pension Plan, a self-invested personal pension (SIPP), is one solution which provides the structure of benefits with bespoke management of the porfolio.
The Government's changes to pension simplification took effect in April 2006. It is important that each person reviews their pension funding in the light of these changes.