Kingsley Financial Planning—independent financial advice

The Pensions market is notoriously difficult to navigate from Stakeholder and Personal Pensions through to Executive Pensions, small self-administered pension schemes, self-invested personal pension schemes and income drawdown.

Although the Government has issued proposals to radically change pensions and move to a single simplified regime from 2005, advice will still be required to ensure that you obtain, amongst other things, best value. In a single regime we will be able to lose the shackles imposed by the complexity of the different rules applying to many types of pension arrangements.

Personal Pensions and Stakeholder Pensions are a tax efficient way to save for your retirement. With each payment made, the government will add 22%. For example, a payment of £2,808 would automatically be topped up to £3,600. So higher taxpayers can claim additional tax relief on their contributions.

Pension benefits can be taken under current legislation at any time between the ages of 50 and 75. Generally speaking, 25% of the value of the fund is eligible as a tax free lump sum. The balance is normally applied to purchase an annuity (a pension for life).

Stakeholder Pensions have a annual management charge capped at 1% of the value of the fund and must also offer various other options. Many pension providers now offer incentives for larger funds, so it pays to ensure that you are currently getting the best value for money.