Personal Pensions, general
Personal pensions are a unique way of saving for retirement. There is no other investment that attracts the same advantages. These include:
-generous tax relief at the start when money is invested (up to your highest tax personal rate)
-tax advantaged growth throughout the life of the investment and, again,
-generous tax free benefits at retirement.
There is no limit to the profits that can be made by these plans but the amount of initial investment is restricted.
Remember that tax legislation may well change from time to time.
Company sponsored Personal Pensions
WARNING - EMPLOYERS READ THIS SECTION - YOUR COMPANY AND ITS DIRECTORS COULD FACE FINANCIAL FINES IF YOU DO NOT OFFER YOUR STAFF ACCESS TO A PENSION SCHEME.
With the advent of compulsory employer investment into pensions where there is no scheme for employees why wait?
"Auto enrolment" means every employer has a start date (known as the "staging" date) when the rules become obligatory. Fail to comply and employers will be fined.
The government hopes to make company pensions efficient, low cost, and flexible "alternatives" to other types of personal pension plan.
Pension plans are usually free of all inheritance tax on death but NOTE THAT, if an investor has put money into a new NEST pension account but dies before taking the pension, under current regulations, the money will be added to his/her estate and charged to Inheritance Tax accordingly.
TALK TO US - retirement planning is a vital part of any organisation's financial considerations, both for the business owners and their staff. Great care needs to be taken to get things right. And quickly, too.
Self invested personal pensions (SIPP)
These plans allow the investor some degree of control and decision-making over the issues over where the money is to be invested.Some investors feel they may be able to have more success in managing their own investments rather than rely on the expertise of an investment house. In these circumstances the self invested plan may be the ideal solution.
In conjunction with the plan manager, the investor can express wishes as to the type of investment although restrictions do apply. Legislation sets out which types of investment are permissible and which are not. It also sets out the limits for investing in any given category.
At all times decisions must be made in conjunction with the pension provider as the plan manager has a duty to ensure any proposed investment meets all criteria.
The scale of monetary investment limits applying to individual personal pensions (see above) also applies to these plans.
Retirement annuity contracts
These are an older form of personal pension retirement savings (finished June 1988). These plans had many similarities to personal pensions described above but existing investors need to take care in considering how to make best use of these investments.
At all times remember that the value of your pension investments is not guaranteed and can rise and fall depending on performance.