Pensions

One of the biggest issues facing our clients is how best to achieve financial security in retirement, as well as potentially provide for dependants and pass on wealth to children. 

At Seabrook Clark we are focused on giving you pension advice to target your objectives whilst accumulating pension savings, options at retirement, meeting income requirements and capital preservation in later life. 

It is imperative to implement an effective investment strategy, both to maximise the size of your pension and preserve capital over time. This applies to younger clients accumulating pensions and also older clients who decide to draw pension benefits via drawdown. 

We are proud to offer you either Discretionary Portfolio Management or our Advisory Investment Service, which are both designed to deliver attractive investment returns for pension funds. 

Pension review / transfer

We advise on whether to retain pensions or transfer/consolidate into new arrangements based on an objective analysis of costs, benefits and investment flexibility. As pension transfer experts (G60 qualified), we can advise on the full range of pension transfers, covering both personal pensions and occupational pensions. 

Retirement planning / drawdown / annuities

You may be approaching retirement and have accumulated various pensions over time. You may not know what the pensions are worth or if they should be retained or consolidated. The range of different pension options may be confusing. 

We are experts on how best to draw benefits from a pension, including pension drawdown and annuities. Our advice on pension benefits and tax-free cash is tailored to your individual circumstances to maximise the value, tax-efficiency and death benefits of your pension. 

Direct property purchase using pension monies

We advise on the purchase of direct commercial property using pension funds. This includes offices, retail and industrial units, as well as agricultural land. A SIPP or SSAS holding direct property can be an excellent way for a business owner to build a valuable pension fund alongside their business. It also offers tax efficiency for both the business and the business owner.

Building a
pension

We are experts in SIPP and SSAS pensions. Our advice is focused on helping a client maximise the size of their pension fund by retirement. This typically covers the most appropriate type of pension, investment strategy, level of contributions and tax relief. 

For high earners, pension funding is subject to restrictions which requires careful advice. 

Our advice deals with how best to optimise pension contributions both for pension saving purposes and tax relief. This includes making use of carry forward rules so as to maximise pension saving and tax relief, especially where the focus is on catching up on pension contributions. 

Whilst we focus on helping you build a pension, our focus is always on tax efficiency, so you stay within strict rules on the pension annual allowance and lifetime allowance. You may have transitional lifetime allowance protection so benefit from a higher personal lifetime allowance. In this case, our planning would focus on making use of the ceiling but minimises the excess subject to possible recovery tax charges. 

Pension
calculator

Our Pension Tool illustrates the potential benefits of Flexi-Access Drawdown and provides a projection of income and capital over time.

Generally, you can take a tax-free lump sum of 25% from a pension. This can be done either as a single lump sum or phased over time.

If you would like pension advice tailored your individual circumstances, please do not hesitate to contact us.

We have assumed the following annualised returns (net of fees and after inflation) on the portfolio types:

Cautious: Inflation + 2%
Balanced / Income: Inflation + 4%
Growth: Inflation + 5.5%
World Growth: Inflation + 8%

We have assumed the annual income withdrawn is fixed over time. These investment returns are representative only and are not guaranteed. Actual returns could be lower or higher than these projections. Past performance is not a guide to future returns, investments can rise or fall and you may get back less than you invest. Your life expectancy could be longer or shorter than you might expect.

This tool and the projections do not constitute investment advice. Please contact us if you would like independent investment advice.

Pension
FAQs

Have a question regarding your pension? Our FAQs will hopefully have the answer for you.

You can normally make pension contributions up to a maximum of your gross earnings (or £3,600 irrespective of earnings), subject to a cap of £40,000, known as the pension annual allowance. However, if your earnings exceed £240,000, this allowance is reduced via the tapered annual allowance to £4,000 for earnings over £312,000. If you are in receipt of pension income from a defined contribution pension, such as drawdown, then your annual allowance is £4,000, known as the money purchase annual allowance.

Across all pensions except the state pension, there is a pension lifetime allowance, currently £1,073,100. The amount increases by CPI inflation each year. The rules are complex, but generally defined contribution pensions are based on their current investment valuation and defined benefit pensions are valued on the basis of the pension multiplied by 20. There is a test against the pension lifetime allowance at particular times, most notably, whenever you start to take benefits from a pension, at age 75, on death or divorce. If the pension lifetime allowance is exceeded, there is a tax on the excess of 55% on lump sums and 25% on income (in addition to income tax).

Pension contributions receive tax relief at your marginal rate of income tax. Employer pension contributions can benefit from corporation tax relief and are not subject to income tax or national insurance as a benefit in kind. Pensions grow free of both capital gains tax and income tax. Pensions are generally free of inheritance tax on death. Pensions can provide a tax-free lump sum at retirement, typically 25% of the value for a defined contribution pension.

A final salary pension, also known as a defined benefit pension is a pension scheme run by your employer. It provides valuable guaranteed retirement benefits based on your salary whilst you worked for the employer and the length of your service with the employer. The benefits usually include an inflation-protected pension income in retirement and tax-free lump sum, as well as potentially a dependant’s pension and benefits on ill health. A defined contribution or personal pension does not provide any guaranteed benefits. Your pension will depend on how much is contributed to the pension, investment market performance and potentially annuity rates. However, personal pensions can provide useful flexibility, particularly when benefits are taken by drawdown, as well as the possibility of passing on pension wealth on death.

A final salary pension will provide a guaranteed scheme pension or secure income for life; often, there will be a tax-free lump sum at retirement either in addition to the pension or as an option by exchanging some of the pension. With a defined contribution pension, normally 25% of the pension value can be drawn as tax-free cash at retirement. The remaining fund can either be used to buy an annuity, which is a guaranteed pension for life, or used for flexi-access drawdown, where taxable income is drawn from the pension fund each year. In the case of drawdown, the pension fund remains invested and on death the remaining pension fund can be passed on to dependants.

The pension carry forward rules can facilitate a pension contribution in excess of your pension annual allowance by utilising unused pension annual allowance from the last 3 years if you have sufficient earnings.

A final salary pension will usually cease on death, subject to any dependant’s pension. A defined contribution pension, however, can pass to your chosen beneficiaries. If you die before age 75, the pension fund can pass free of tax, whereas after age 75, any monies withdrawn from a pension by a beneficiary will be subject to income tax at their marginal rate of tax. Pensions normally pass free of inheritance tax provided that monies remain in a pension.

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Exeter: 01392 875500

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