Ipswich Financial Adviser

Posts Tagged ‘pension’

An annuity is the financial product that you purchase with your pension money at retirement. The annuity pays you a guaranteed income for the rest of your life. You can buy additional benefits for your spouse and have other features added to the annuity when you first take it out.

Your current pension provider will offer you an annuity when you reach your stated retirement age, but BEWARE; the offer from your existing pension provider is invariably a poor one.

YOU MUST, shop around for the best annuity rate you can find in the open market. By doing so you will increase the amount of guaranteed income you will have in retirement, a VETY important factor.

Also, it is vitally IMPORTANT, that you tell the annuity provider about your medical background . If you suffer from high cholesterol, diabetes, smoke, take medication, have suffered previous illnesses or have a current medical diagnosis of a complaint (however irrelevant they seem to you), any of them may provide you with an Enhanced Annuity. This means the provider will pay you MORE income as you have a past or current health issue.

As can be seen it is vital to get the best advice when you purchase an annuity. Speak to the experts at Thompson Financial Consulting Ltd and we’ll ensure you get more money in your pocket.

If you have climbed the corporate ladder or been successful at running your own business and are earning in excess of £130,000 per year then you need to be fully aware of the restricting tax relief, on pension contributions, that will affect you. 

You need to make sure you have calculated your “Net Relevant Income” correctly to see if you have actually earned above the £130,000.  This includes your income that is chargeable to income tax and pension contributions paid under a net pay arrangement. The calculation does allow you to deduct certain losses and reliefs, relievable pension contributions subject to a maximum deduction of £20,000 and donations that qualify for gift aid. Finally, if a salary sacrifice has been agreed previously, then this may have to be added back into the income figures depending on certain rules.

The calculation is not straight forward and you have to do this for the 2007/2008, 2008/2009 and 2009/2010 tax years. If in any one of those years your income was at or above £130,000 then the new pension tax relief restrictions could have an affect on you.

I would strongly advise that if your income is near or above the relevant figure that you get appropriate financial advice to ensure you make your financial planning as efficient as possible.

Please contact Thompson Financial Consulting and we will be happy to give you the right advice and help you through the pension changes.

When you are looking to invest money or invest within a pension, it is of paramount importance that you diversify where you invest your money.

There are many different asset classes that you can invest in such as, Equities, Bonds, Gilts, Property, Cash and Commodities to name some of them.

Ensuring that you invest in a spread of these means that you are not backing a one horse race. If you only invest in one area, you stand a good chance that you may not get the returns you had hoped for. However, if you spread your money between the various asset classes you ensure that you can make the most of all the investment opportunities that are available.

By diversifying you get the benefit of lowering your investment risk, but with the upside of potentially greater returns, a win / win situation.

You should always get professional help to ensure you have the right mix of investments and that the investment risk you want to take is matched by the spread of investments you put your money into. 

Getting the combination right can mean the difference between making a return or loosing money.

Please feel free to contact Thompson Financial Consulting Ltd, should you require any help or advice ion planning your investments or pensions.

The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance.

As a reminder to the post I made in November, the rules for taxing tax free cash from your pension change on the 6th April 2010. The pension companies are very busy with the additional requests and it will soon be too late to get everything organised by the 5th April 2010, so read on and make sure you don’t get caught out.

At present, if you reach your 50th birthday then you can potentially take up to 25% of your personal pension fund as a tax free lump sum. Unfortunately, from the 6th April 2010, the age to be able to do this changes to 55. There is NO transitional period, the change just comes in.

If you have always considered taking your tax free cash and you are not 55 on the 6th April 2010 then you will have to wait until you are. This could potentailly mean a wait of up to 5 years; as if you reach your 50th birthday just before the 6th April 2010 and don’t action a request for a tax free cash withdrawal then you will have to wait 5 years until your reach 55. This could affect your retirement plans.

If you feel this issue will affect you then you need to start planning now. Contact Thompson Financial Consulting Ltd and we will be happy to help.

The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance.

Unlocking your pension will almost certainly mean that you will have less income in retirement AND because of the reduced level of income pension unlocking is usually only suitable for a very limited number of people and circumstances. All other options should be investigated fully before you consider unlocking your pension.

When you are looking to invest or put money away into a pension you MUST consider where you are going to place your money e.g. into what are you going to invest.

Are you going to invest in Equities, Property, Gilts, Bonds, Cash, Commodities etc, or a combination of these?

But this is not your only decision, once you know what asset class you are going to invest in (Equities, Property, Gilts, Bonds, Cash, Commodities etc) there are many sub sections to these investments. For example, Equities can be in different parts of the world, UK, North America, Europe, Asia, Emerging Markets etc.  So you need to decide on that.

Further more, there are more sub sections such as large, medium or small cap equities.

As you can see the choice is huge and that is ONLY ONE asset class. You need to consider all these options for all of the other areas to.

So the above is too difficult and you decide that you will invest in a “Managed Fund” so that the decisions are made for you, but how do you know the Managed Fund is any good and will provide you returns? How do you know that the investment risk rating of the fund matches the level of risk you want to take. Managed funds can range for 3 up to 9 out of 10 on investment risk ratings depending on how the fund manager invests the money! Would you want to take that much investment risk with your money without knowing?

This shows that you should get professional help in organising your investments and pensions, to ensure the money works as hard as possible for you.

Please feel free to contact Thompson Financial Consulting and we will be happy to guide you through the right investment choices for you.

The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance.

We all start to think about New Years resolutions when we start to get to the end of the year.

Why not have a different type of New Year resolution and decided to take a look at your money and old financial policies.

There couldn’t be a better time to find your old policies and pension documents that sit at the back of the cupboard or in the loft and get a professional financial adviser to review them. This will ensure your money is working as hard as possible for you in the New Year.

Thompson Financial Consulting is happy to help and advise you to plan your financial life. Please contact us for your review.

In a recent survey of the under 40’s by Standard Life it was found that most people questioned thought that mortgages were much more flexible than a pension, because you can overpay, underpay, add lump sums or take a payment holiday with a mortgage. 

What you may not be aware of, is with modern pensions, they offer this flexibility and more – but as an industry we have done a really bad job in telling people about it.

With modern pensions you are in control as to the amounts of money you want to pay in regularly, when you want to pay them in, how often you want to pay, to be able to make adhoc payments or even stop payments for a while. This can all be done without any penalties or extra fees and without changing your original pension policy, so you can keep your policy running no matter what your situation is.

All these benefits make pension planning much easier and more affordable.  Get Thompson Financial Consulting to check out your pension to see how flexible it is. You may be able to do more with your pension than you first thought.

Your home may be repossessed if you do not keep up repayments on your mortgage.

What is inflation? – Inflation takes away the spending power of your money overtime; as inflation and so prices increase the pound in your pocket is worth less each year, a sobering thought.

As an example, if inflation is only 3% p/a, £100 pounds invested today would only be worth, in really terms, £53.75 at the end of a 20 year term.   That is the negative effect of inflation and why it is so important to take it into account when you are looking at your long term savings and investments.

Many illustrations you get from investment or pension companies often do not take inflation into account, the figures that you get  may look large in today’s prices, but in 20 or 30 years time, this perceived value will be much, much less. That is why it is important to get professional help when organising your long term savings and pensions to ensure all the factors have been taken into account and that you stand the best chance of beating inflation.

If you are looking to save regularly within a pension or investment, please speak to Thompson Financial Consulting and we will be happy to help advise you as to the best way to go about investing your money to help beat the effects of inflation.

When I am reviewing clients existing investment and pension holdings the one mistake I see time and again is the narrow way in which the investment content of the policy has been set up.

You will typically set the policy up within one or two funds and you have confidence that this will provide you with a return over a period of time. Unfortunately, the economy and markets  are always changing, so you need to ensure you have money invested in different types of funds so that you spread (diversify) your money. For example, if equities (shares) are not doing well, it could be that fixed interest holdings or property might be doing the opposite and are providing good returns. If you hold all your money in equities then you are MISSING OUT on potential returns from other areas that you do not have any money invested in.

This is why it is SO IMPORTANT  to spread your money between different funds and investment areas, so that you get access to a diversified portfolio and hence GREATER long term returns.

Don’t get caught out and believe that one type of fund can provide you with a consistently good return. You need to ensure you spread your money and with it, spread your risk for GREATER long term returns.

Please feel free to contact Thompson Financial Consulting and we will be very happy to help in advising you the best way to set up your pensions and investments to get the best potential returns.

The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. Past performance is not a guide to future performance.

I am often asked by clients as to how much they should pay into their pensions. This question is a bit like “how long is a piece of string.” It all depends on the individuals affordability and what they want for their retirement.

What you should be asking is how much income in retirement would you like or need. This must be realistic, but once you have a rough idea of this you can work backwards and see what size pension fund you will need to achieve the income you require in later life. You also have to take account of any employer’s pension schemes you may have or any other assets that could provide you with an income in your retirement.

Once this has all been reviewed and calculated you can then work out how much per month you should put away to achieve the level of income you want in your future retirement. The earlier you consider this the better;  you will have longer to grow your money and so have more in your pension pot for your retirement.

As can been seen this is a complicated assessment of your current and future requirements. Speak to Thompson Financial Consulting and we can help you make the most of your money for a rewarding retirement.