Do you fully understand what your options are at retirement?

Today I read the Scottish Widows Retirement Survey for 2015. It was an interesting read but I picked out a couple of alarming figures!

  • Only 22% of the 60-64 year old fully understand what an annuity is & only 14% fully understand income drawdown
  • Only 13% of 50-59 year olds fully understand what an annuity is & only 9% fully understand income drawdown

These figures astound me as choosing how you take your pensions at retirement is one of the most important decisions in your life!

Do you fully understand your options?

It is imperative you speak to someone to ensure you understand ‘ALL’ the options available to you to enable you to make the right choices when planning for your retirement!

Speaking to someone about your pension options in retirement is easy with Reeves Independent, just use our contact form or call us on 0191 281 9862 for a FREE initial conversation!

For further information please do read our Blog – Your four-point checklist for investing for retirement

What happens to your pension when you die?

One of the most common questions we get asked here at Reeves Independent by clients is what happens to my pension when I die?

There are of course a number of different scenarios when answering the above question. One thing is for sure is that the new rules since April 2015 now make it possible to pass pensions on to loved ones in a more tax-efficient manner.

If you’ve money in your pension but you haven’t retired

If you die before you take anything from your pension, it will usually be paid as a lump sum to your beneficiaries tax-free.

As long as it is less than the lifetime allowance (£1.25million in tax year 2015/16) it will be paid tax-free, unless you die at age 75 or older.

The Government has announced changes to the way death benefits from pensions are taxed:

  • If you die before age 75 – your pension can be paid to your beneficiaries tax-free, either as a lump sum, an annuity, or through flexible drawdown.
  • If you die age 75 or older – your pension can be paid as a lump sum which will initially be taxed at 45%. Or your beneficiaries can use flexible drawdown and will then only pay tax at their marginal rate.

There will normally be no inheritance tax to pay.

If you’ve money left in flexible drawdown

If you die before age 75 with your money in flexible drawdown your spouse, partner, dependant or beneficiary can:

  1. Stay in the flexible drawdown plan and take income tax-free
  2. Take the pension as a lump sum tax-free
  3. Buy an annuity, where income will be paid tax-free

If you die after age 75 with your money in flexible drawdown your spouse, partner, dependant or beneficiary can

  1. Stay in the flexible drawdown plan and take income subject to tax at their marginal rate
  2. Take the pension as a lump sum tax-free which will be taxed at 45%
  3. Buy an annuity, where income will be subject to tax at their marginal rate

If you have an annuity

If you chose a guaranteed period and die within this period then the annuity will continue to be paid until the end of the guaranteed period.

If you bought a joint life annuity the annuity payments will continue to be paid to the second person, at the level you chose, until they die. If you die before age 75 the annuity payments paid will be tax-free, if you die after age 75 then any payments will be taxed as income at their marginal rate.

In all other cases your money dies with you so no further payments are made.*

Speaking to someone to ensure your loved ones don’t lose out after your death easy with Reeves Independent, just use our contact form or call us on 0191 281 9862 for a FREE initial conversation!

* Scottish Widows Fact Sheet – http://www.scottishwidows.co.uk/retirement-planning/retirement-explained/pension-tax/inheritance/index.html

Reeves Independent– 10 most read articles this month!

Here are the 10 most read articles from our social media mediums over the last month

As always we have included a range of articles on different financial matters to provide you with as much information as possible;

Stick or twist? Why you might trade in a final salary pension!

Your four-point checklist for investing for retirement

Can you afford NOT to work your Investments?

Tax-free savings: Double up your pension relief

Understanding Pension Tax Relief!

‘My wife passed away in 2005. What will my IHT allowance be under the new rules?’

Two million cohabiting couples at risk of leaving finances in legal limbo!

Will your pension be big enough for you to retire at 55?

8 steps to Inheritance Tax Planning heaven

The insurance that can pay the bills if you can’t work – experts warn too many people still lack a safety net!

We hope that you find some of the above useful. If there are any areas that you would like more articles on please let us know as we welcome any feedback

If you would like to discuss any of the above articles & how they may affect you then please contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange a FREE initial appointment

Additionally please have a look at our core services document or visit our website www.reevesifa.com for further information

Your four-point checklist for investing for retirement!

I’m sure you are aware pensions changed in April this year. As result of these changes people now have more choices about how & when they can access their pension pot from the age of 55.

People can take cash, a flexible income (drawdown), or a fixed income (annuity), or indeed a mix of these. Drawing from our experiences since April we can say that drawdown has become a lot more popular as a choice due to the flexibility of accessing funds for the plan holder & their family after the plan holder’s death.

So what should you be thinking about when it comes to the money in your pension?

1. Think about your pension early - this allows you choose the investments that suit what you’re planning, whether that’s buying an annuity, taking a flexible income, taking your cash as a lump sum or a mix of all three. You can find more about this in our Are you ready for the pension freedom changes? blog.

2. Once you’re retired – stay invested – for example if you’re taking a flexible income from your pension it can be tempting to leave all your money as cash – but this may not give you the best results. Obviously cash is less likely than other investments to fall in value, however on the other hand it’s growth potential is also less. Therefore careful planning is required with respect to your investments during your retirement.

3. Balance your income goals – life expectancy is rising & therefore this means you will have to fund your retirement for much longer. One of the biggest challenges is making your money last over time; taking the income you need to today as well as making your money last through your retirement. In addition the new rules that reduce tax when inheriting pensions, reducing it to zero in some cases means you may want to make sure you have enough left to pass onto your loved ones. All these different goals need to be looked at & taken into account.

4. Take care of the early retirement years – If you’re taking an income, you need to ensure you manage & analyse how much your investments move up & down in value. A pro-active management of these funds is vital as it becomes much harder for your pension to recover its value after any early falls in the stock market.

Here at Reeves Independent our service is designed to help you make the right decisions at & during retirement. Please take a look at our Retirement Options Service Proposition

Speaking to someone about your pension options in retirement is easy with Reeves Independent, just use our contact form or call us on 0191 281 9862 for a FREE initial conversation!

July’s most read articles – Summer Budget Special!

Hello from Reeves Independent

We thought we would leave our monthly newsletter until after George Osborne’s Summer Budget yesterday, and whilst there weren’t too many immediate issues, many experts agree with our expectation that Pensions will remain a major focus and ‘radical’ changes may remove planning opportunities in the future.

Here are a couple of the best articles we have found on the Budget from yesterday;

Summer Budget 2015: What it means for people like you!

2015 budget roundup: what effects will the announcements have?

Additionally this is a useful calculator from the BBC website that shows how the Budget will affect you!

Finally as always we have tried to include many of the other areas involved in financial planning in our most read articles in the last month below;

How to pass on your pension savings to your loved ones!

Case Study – Creating a legacy for your family!

BLOG: Help your children to secure their financial future!

Are you ready to make the most of your #PensionFreedom? Advice is the way to be confident of making sound choices!

‘I’m so glad to be alive – and £400k richer’: James paid £26k over 13 years for a policy he hoped he would never need – but his foresight paid off

Do you have Powers of Attorney – SIMON LAMBERT: You need this essential safety net for your family finances – however old you are!

Case Study – A growing household!

A guide to paying taxes in retirement!

Incredible! Expats have lost pensions worth £850m An estimated quarter of a million UK pensioners overseas are missing out on benefits as pension scheme trustees can’t trace them!

How to make a financial safety net. Death, illness, money troubles… You can’t prevent the first, you can’t do much about the second, but you can protect against the financial problems that both of those can bring!

As always we hope that you find some of the above useful. If there are any areas that you would like more articles on please let us know as we welcome any feedback

If you would like to discuss any of the above articles & how they may affect you then please contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange a FREE initial appointment

Additionally please have a look at our core services document or visit our website www.reevesifa.com for further information

Please seek advice! Pensioners’ tax hell.

As we await George Osborne’s Summer Budget today I thought I would share this  article I read this morning from the Express website that highlights the importance of planning your pension income in retirement!

It is vital you speak to an expert to ensure you make the most of the pension you have worked so hard to save for throughout your life!

“Chancellor George Osborne’s reforms, introduced on April 6, allow the over-55s to take their pension pot as cash if they wish. The move was hugely popular but many people failed to realise that there was a big tax sting in the tail.

Many now face unexpected tax bills running into thousands of pounds.

More than 60,000 savers withdrew around £1billion in the first two months after being granted flexible access to their money in April, according to official figures”

Please do read the rest of the article – Pensioners’ tax hell. SAVERS taking advantage of their newfound pension freedoms have unwittingly handed the taxman a massive £700million windfall!

It is vital you understand all the tax implications of taking your pension in retirement!

Speaking to someone about these implications is easy with Reeves Independent, just email info@reevesifa.com or call us on 0191 281 9862 for a FREE initial conversation!

Other similar articles

Are you ready for the pension freedom changes?

Speak to an advisor NOW! Pension tax breaks: this is why they’re about to be cut

Five pension avoidance scam tips!

 

Typical questions other pension savers like you ask are!

As I’m sure your aware last week saw the introduction of the much talked about pension changes. We have been inundated with phone calls from clients & prospective clients who want to understand their options as we enter this new era of pension freedom.

Have you asked yourself any of the following questions?

  • Do the new rules affect me, even if I’m not retiring yet?
  • When can I start taking money from my pension?
  • Should I take the 25% tax-free cash as soon as I get to age 55?
  • How much tax would I pay on further withdrawals?
  • How exactly do I pass my pension on to my children?
  • Should I move money in savings accounts and other investments to my pension?
  • How do I ensure I don’t miss out on the benefits of the new rules?

Speaking to someone about your options is imperative! Why not do that with Reeves Independent, just email info@reevesifa.com or call us on 0191 281 9862.

Are you a pension millionaire & you didn’t know it?

Here are a few questions to think about?

  • Did you know that a 54 year old who has been a high earner with 30 years working for companies with a Pension scheme could be sitting on a combined pension pot of £1m?
  • Did you realise that you could convert your pensions into an income whilst protecting the value of the fund for future generations?
  • Did you know that after April 2016 the pension lifetime contribution plummets by £250,000, resulting in you being taxed on money you may not even realise you have?
  • Did you know if you’re 55 or more this year you can protect your pensions against this and even start to get real value from the money you’ve set aside?

Please do have a read of the following article – Who wants to be a pension millionaire? How much would you have to put away each month to reach the £1 million lifetime limit on pension savings? http://citywire.co.uk/money/who-wants-to-be-a-pension-millionaire/a805312

Speaking to someone about your Retirement Options is imperative! Why not do that with Reeves Independent, just email info@reevesifa.com or call us on 0191 281 9862.

Case Study – Living a comfortable life in retirement!

Background

Having been retired for over 4 years Mr & Mrs G felt now was a good time to review their finances with a view to simplifying matters. They felt the amount of paperwork they had to deal with every year was an unnecessary burden. They had built up significant funds over the years with a number of different companies. Their previous advisor had retired a couple of years ago & they were looking to review their plans to help them clarify their current & future financial position.

Our approach

We arranged an initial meeting where we got to understand their financial situation, their lifestyle & their future plans. Here at Reeves Independent, we believe a great financial plan is central to achieving a more certain financial future. Understanding a clients attitude to risk underpins every financial decision. We do this with a questionnaire & the results help us balance out the level of risk with the expected investment returns to ensure the investment portfolio is fit for purpose.

We reviewed Mr & Mrs G’s financial & life style goals & produced a future cash flow analysis to help simplify their future needs

The outcome

We were able to simplify their investments by aggregating some of their investments into a single investment platform & some into another provider offering smoothed returns. We also simplified the number of tax wrappers used. This was achieved over a few years to ensure we maximised the tax allowances available to them both. Though the process there were also savings in annual charges which was a welcome bonus.

Mr & Mrs G now have peace of mind that their finances are in good order & can enjoy their retirement doing the things they had planned

Does this Case Study sound familiar to you? If you think we could help contact Reeves Independent on 0191 281 9862 or email info@reevesifa.com for a FREE introductory chat!

Pension Lifetime Allowance to fall to £1 million! Won’t just affect highly paid!

Following yesterdays budget the main thing our clients have contacted us about is how does the reduction in the Lifetime allowance going to affect them.

People’s perception is that it won’t affect them. However it is surprising how many people it can affect. Many senior public service employees or people who have been in Final Salary Schemes for years WILL be affected by this change.

Please do read this good article by Mercer below

Pensions Lifetime Allowance to fall to £1 million: Won’t just affect highly-paid! http://uk.mercer.com/content/mercer/europe/uk/en/newsroom/uk-budget-2015-mercer-comments-on-pension-changes.html

If you want to discuss how this change in the Lifetime Allowance affects you then contact us NOW on 0191 281 9862 or e-mail info@reevesifa.com to arrange a FREE initial appointment