Pension Planning


It’s a bit of a recurring theme I’m afraid, but then it is part of what we do! As I write we are in the busy, end of tax year rush to fund pensions and ISAs.  It feels busier than normal despite some believing that the stock markets might be too high to consider investing more money.


Changes to pensions legislation have made them more attractive for savers who can now pass their pension fund inheritance tax free, down through the generations if they are not needed. Perhaps the regular threat of cutting higher rate tax relief on pension contributions is also a motivator, or maybe the increased ability to access funds (through some schemes) if required.

Younger savers should not forget the importance of thinking ahead.  It sounds like a nag but as the Sunday Times recently reported, a 29 year old who tried to survive on the new full state pension (£155.65/week) for just two weeks concluded that she couldn’t live on it alone. And that didn’t even include ‘luxuries’ (?) such as clothes and holidays. Don’t be misled into thinking that everyone will get the full State pension. The new State pension is less generous for millions and will be paid at a later age.

How much to save in to a pension is not an exact science but AVIVA suggest that you should save a total of 12.5% of your gross salary each year to a pension starting 40 years before you intend to retire.

Sadly, the days of employer funded, final salary pensions are dwindling. I think it’s a shame when corporate cost cutting has put an end to the employer’s willingness to look after their employees’ retirement needs. Is it fair that millions should now fight their way through pension and investment legislation to fathom out how much and where they need to save for a reasonable retirement?

In response to the fact that not enough people are saving for their retirement, the Government now requires employers to ‘auto-enrol’ employees in to a pension scheme.  The required minimum contributions are well below what they need to be, but legislation requires these contributions to increase over time. So at least it’s a start, but for many it will be too little, too late.

Yes, pensions are dull but so will retirement be if you haven’t saved enough!

If you would like to discuss your pension planning with one of our expert Financial Planners, get in touch.

Mark Penston is Partner and Chartered Financial Planner with Bluesky Chartered Financial Planners