Retirement Planning
There comes a time when even the most devoted CEO or employee must hang up their pen.
If you have founded or helped build the business you want to make sure it can support you now and in the future. This is where we can help draw up an effective exit strategy that includes retirement planning. This is vital to all companies however young or mature.
CBK Wales offers a range of occupational pension schemes that can meet all your needs from directors to senior management and staff.
Remember penions save you money - any contributions made into a pension scheme by a company allows it to benefit from a reduction in corporate tax.
Like all investments pension schemes must be reviewed annually to make them work for you. At CBK Wales, we conduct regular reviews to ensure that your scheme meets your business needs.
There are a number of pension schemes to consider:
A pension is a long term investment. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.
SSAS (Small Self Administered Scheme)
An SSAS is designed for company directors and shareholders and is ideal for limited and family companies who want to transfer the balance of power down the generations. It gives you power over your investments and is the most flexible pension and tax efficient scheme for shareholding directors.
SIPPS (Self Invested Personal Pension)
SIPPS are a popular choice as you, or your experienced IFA, can decide where to invest. They have a wide scope as every UK resident under the age of 75 can contribute to SIPP.
Often known as wrappers, SIPPS contain a wide range of investments including stocks and shares, unit trusts, insurance company funds, banks and building society accounts and commercial property.
These pension plans tend to be suited to individuals with larger sums of money who, in the hope of obtaining superior returns, are prepared to have closer involvement with their pension planning and particularly the investment strategy.
CBK Wales can help you choose the best spread of investments and we regularly review your portfolio to maximise your return.
GPP Group Personal Pension
Another benefit that you can offer your staff is a Group Pension Plan. Under a GPP you administer the scheme and collect your employees’ contributions whilst adding at least 3% of their salary. All your payments benefit from tax relief. With a GPP, charges could be lower than a personal pension plan, which is important as the more that is spent on charges, the less that will be available on retirement.
Often seen as similar to stakeholder pensions a GPP can appear more atractive as it can offer a broader range of investments.
Stakeholder Pension
The Government launched its Stakeholder Pensions initiative in April 2001, with the main objective of encouraging lower to middle earners to save for their income in retirement. A charging cap was placed upon Stakeholder Pension policies, which means that there are no initial charges, no fixed monthly charges, no penalties if you decide to transfer the benefits away from the pension provider and no penalties should you decide to take the pension benefits earlier than originally envisaged. The only charge the pension provider is allowed to apply to a Stakeholder Pension policy is the Annual Management Charge and this at present cannot exceed 1½% per annum of the plan value for first 10 years then reducing to 1% per annum.
All individuals (even non-taxpayers) can make pension contributions of up to £3,600 gross in any tax year without evidence of earnings, and will have to make a net payment of only £2,808. Basic rate (22%) tax relief is obtained by the pension provider and where appropriate higher rate tax payers can claim additional tax relief via self assessment. Stakeholder pensions were initially seen as ‘off the peg’ policies, but we believe it is still important that individuals take advice on the appropriate investment fund, and whether contributing to a Stakeholder Pension Policy disadvantages them in any way.
Individual Personal Pensions
There is no doubt that over the last few years, the pensions industry has endured difficult conditions. We have seen two major reforms of pension legislation, acute problems with company pension schemes and concerns about Equitable Life and others. It is perhaps not surprising therefore that the public has a fairly jaundiced view of the pensions industry and widely doubts the wisdom of “getting involved with pensions”.
Despite all of this we believe that personal pensions remain a very attractive savings vehicle for retirement savings. In fact, in many ways the environment for pension investment is more favourable now than it has been for many years.
These are some of the major factors:
- attractive tax breaks remain in force for pension investment
- the rules on pension contribution are more generous and on benefits more flexible than previously
- there is a huge range of potential investments on offer from personal pension providers
- charges made by pension providers are generally lower than those previously charged by pension providers
This is a powerful combination of factors and these days there is simply no need for anyone investing in a personal pension plan accepting a higher level of risk than they are comfortable with.
People with existing pension plans should ideally review them before committing any further significant sums.
Why not contact us for a more detailed analysis of your requirements.
