Client
Portal

Retirement planning

Back to News & Views

Your wealth. Your legacy

It goes without saying that there’s no time like the present to kick-start your retirement planning. The earlier you start, the better. You’ll then be able to set about realistic goal setting and, importantly, diversification of your investments. Working hard to save for your retirement is an important endeavour.

Maximising your annual pension allowance is key to achieving a more tax-efficient retirement income. The current annual allowance allows you to contribute up to £40,000 a year or your annual income (tax year 2022/23), whichever is lower, to your pension and still benefit from full tax relief at your marginal rate of Income Tax.

Annual self-assessment

For example, if you are a basic rate taxpayer and contribute £100 (gross) into your pension, it will only cost you £80 (net). Your pension provider will claim the difference as tax relief – 20% basic rate tax relief – and add it to your pension pot. If you're paying higher rates then you can also claim higher rate tax relief by completing the annual self-assessment form.

Planning ahead for the year is key when it comes to retirement and avoiding the emergency tax trap. If you take several large sums from your pension over a few months, this could push you into a higher rate tax bracket and subject you to emergency tax as HM Revenue & Customs may assume you're planning on taking this income every month.

Stay within tax thresholds

Rather than taking lump sums, it may be more appropriate to spread out the amount from your pension over the next few months or years in order to maintain a clear plan and ensure that you are paying the correct amount of tax. This way, you can enjoy the money from your pension without any surprise taxes down the line.

When it comes to retirement, withdrawing what you need is essential in order to stay within tax thresholds. The benefit of pension drawdown means that you can vary your retirement income from year to year, keeping it within an acceptable threshold.

Missing valuable entitlements

Additionally, it's worth thinking about other assets you have available. For example, if you have sufficient savings in your Individual Savings Account (ISA) then this can be withdrawn as tax-free income without affecting your tax bracket. Utilising both pensions and ISAs together can be very useful during retirement.

It's important to understand your pension and the 25% tax-free cash that you may be eligible for. Some pension savers with older company pension schemes may have more protected cash available than the headline rate, yet many of them often forget they are eligible for these benefits. Don't assume that your pension has the same benefits as others – an adviser can help you clarify your situation and make sure you aren't missing out on valuable entitlements.

Right choice for you

Additionally, you need to be aware of your pension Lifetime Allowance, currently set at £1,073,100 for the 2022/23 tax year. You can save more than this into a pension, but you may be charged additional tax. The amount of tax you pay depends on how you draw the money out and can result in 55% extra tax if you take it as a lump sum or 25% plus Income Tax when taken as an income.

Taking benefits from a defined benefit pension scheme before age 65 may also be subject to an additional cost, but it could still be the right choice for you. You will receive a lower pension, but for a longer period. This could potentially put you in a lower tax bracket or bring benefits below the lifetime allowance. Before making this decision, weigh up what other savings you have access to, such as ISAs and investments.

How will you afford the standard of retirement you want?

By maximising your annual pension allowance, you could increase your salary and enjoy a more comfortable retirement in the future. If you would like to discuss your options we can provide a plan to ensure your drawdown strategy is conducted in a tax-efficient way. Please contact us to find out more.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

Book your FREE, no obligation discussion today. Schedule Appointment

Sign Up to our mailing list - Receive regular news, tips and financial commentary from the Gemini Team.

Latest News

  • Improving your overall life satisfaction and happiness Financial stress is one of the most significant sources of anxiety and discomfort in the modern world. It's not just about having enough money to meet our needs; it's also about managing that money effectively and making informed decisions.  This is where the concept of financial fitness comes in. Like physical fitness, financial fitness is not a destination but a journey, a continuous process that requires discipline, knowledge and an understanding of your financial goals. [...]

  • Simplifying financial management, lowering charges and increasing future funds You may have worked with several employers throughout your career, accumulating multiple pension plans. This can also apply if you've been self-employed or a contractor, resulting in personal pensions.  While multiple pensions can be administratively challenging to manage, they could also be financially draining due to high fees or subpar investment performance. What is a potential solution? Pension consolidation.  This strategy can simplify financial management, lower charges and increase future funds. However, it has potential pitfalls, so seeking professional financial advice is crucial. Let's delve into pension consolidation and what needs to be considered. [...]

  • A personal journey tailored to your unique financial situation and aspirations Financial planning isn't a one-size-fits-all process. It is a personal journey tailored to your unique financial situation and aspirations. Without considering your complete financial status and goals, the effectiveness of specific planning elements can be compromised. Here are some main areas to consider when developing a robust financial plan. [...]

  • 110 measures aimed at stimulating growth in the UK's economy Chancellor of the Exchequer, Jeremy Hunt, announced during the Autumn Statement 2023 what he said was 'a comprehensive package of 110 measures aimed at stimulating growth in the UK's economy’.  He acknowledged the announcement comes amid a challenging economic climate. Still, Mr Hunt said he remained optimistic, pointing out that the UK's economy has been more resilient than expected this year. Our Guide to Autumn Statement 2023 summarises the key points announced. [...]

  • Rates to be cut for millions of workers In the Autumn Statement 2023, Chancellor Jeremy Hunt announced significant reforms to National Insurance. This is the third change to National Insurance since 2022. But despite these cuts, the tax burden is still expected to remain at a record high. Mr Hunt cut the main rate of Class 1 employee NICs from 12% to 10%. This will take effect from 6 January 2024. There will also be a cut in the main rate of Class 4 self-employed NICs from 9% to 8%. This will take effect from 6 April 2024. From 6 April 2024, Mr Hunt said no one will be required to pay Class 2 self-employed NICs. [...]

  • 1 week ago

    ‘Triple Lock’ to increase by 8.5% from 6 April 2024 The State Pension is set to increase commencing on 6 April 2024 due to a mechanism known as the 'Triple Lock’. Chancellor Jeremy Hunt confirmed in the Autumn Statement 2023, an increase of 8.5%, which pensioners will welcome. [...]

  • Crisis looming over today's youth Today’s twenty-somethings are on the precipice of a retirement crisis. According to new research, if they don't adjust their savings habits, they could face an income shortfall of over £25k annually during their golden years [1]. This warning applies to young adults in the UK, aged 22 to 32, who are currently not saving enough for their retirement. The findings reveal that a significant proportion of this demographic could be staring down the barrel of a retirement savings gap. [...]

  • 2 weeks ago

    Planning to aid the next generation According to new research, close to one in five (18%) of parents and grandparents have dipped into their own property wealth to assist their family members in climbing onto the property ladder [1]. Often, they turn to the equity of their homes to gather the needed funds, either through equity release, downsizing or remortgaging. This group, affectionately known as the 'Bank of Family', is increasingly leveraging their property wealth to aid their children’s entry into the housing market. [...]

  • Considering gilts for your investment portfolio? High interest rates make gilts an attractive option for some investors, especially higher rate taxpayers who benefit from the tax exemption from capital gains. What exactly are gilts? These UK government bonds, or debt securities, are issued to finance public expenditure. Their appeal lies in their low-risk nature and guaranteed income. [...]

  • The significant decision of choosing a private school for children Choosing the right educational path for your children is one of the most significant decisions you will make as a parent. Among the many considerations, private schooling often emerges as an option due to its perceived benefits, such as smaller class sizes, specialised programmes and personalised attention. [...]

  • Why many people experience a mixed bag of emotions on the subject Retirement is often envisioned as a time to unwind and indulge in our passions after years of hard work. However, recent research indicates that many individuals feel apprehensive about retiring due to financial and emotional concerns[1]. [...]

  • Considering gilts for your investment portfolio? High interest rates make gilts an attractive option for some investors, especially higher rate taxpayers who benefit from the tax exemption from capital gains. What exactly are gilts? These UK government bonds, or debt securities, are issued to finance public expenditure. Their appeal lies in their low-risk nature and guaranteed income. [...]

Gemini Wealth Management Ltd is Authorised and regulated by The Financial Conduct Authority Registered in England & Wales No. 5919877 Registered Office: Gemini House, 71 Park Road, Sutton Coldfield, West Midlands B73 6BT The Financial Conduct Authority does not regulate tax and trust advice, will writing and some forms of buy to let mortgages. The guidance and/or advice contained in this website is subject to regulatory regime and is therefore restricted to those based in the UK.

Website by Mellow Marsh Software
© Gemini Wealth Management Ltd
Important Documents | Cookie Policy