Who is protecting your future – part 1
Introduction to pensions
Although there are different types of pension schemes available, they all have the same aim – to help you save money and provide you with an income when you’re older.
In a series of articles, we will try and explain your options and clear some of the minefields for you.
We are not pension advisors – we are accountants. We do not sell pensions and have no vested interest, other than helping our clients protect themselves financially.
In this first article, we introduce what pension schemes are and how they work. You’ll see the different pension alternatives available, how they vary and what it all means for you.
What is a pension scheme?
There are lots of myths around pensions and their virtues. In very simple terms, a pension scheme is just a type of savings plan to help you save money for later life. It also has favourable tax treatment compared to other forms of savings.
A savings plan
A pension is a tax efficient way of saving over a longer term. It makes sense to put some money away for when you are older and that’s what pension schemes help you do. You save a little of your income regularly during your working life so you can have an income in later life when you want to work less or retire.
There are several types of pension schemes. Some may be run by your employer, others you can set up by yourself. And saving into one scheme doesn’t mean you can’t save into another or use other tax-efficient savings plans like ISAs.
If you are self-employed or running your own business you need to make your own provision for later in life – nobody else is generally saving up for you.
When the time comes for you to start enjoying your pension, there will be several options available to you. These may include being able to take a tax-free cash sum and the added security of being able to receive a regular income.
What’s the difference between a pension scheme and the State Pension?
A pension scheme is designed to provide you with income in addition to the State Pension. The single tier State Pension currently provides up to £159.55 a week, although you may have some additional protected payment as well. If you would want more income than this, saving into a pension scheme makes sense.
When should I start saving into a pension – is it too late?
It is rarely too late. There will usually be a value in saving into a pension scheme, particularly if you are employed, including being an employed director, and your employer also contributes. Also, it’s a tax-efficient way of saving money and you may be able to take some or all you save as a cash lump sum.
That is a general introduction and we will explain your options further over the coming weeks.
For further advice existing clients email us at support@anytime.uk.com or call 03333 110 230
For new enquiries contact us now
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