Your decision, our support
Pensions offer a unique opportunity to save for your retirement. Thoughtful planning gives you lots of opportunities for accumulating savings to support yourself and your family in your later years.
We know that sometimes people are worried about being confused by lots of financial jargon – and maybe that’s been your experience in the past.Final salary and defined benefit pension advice
We’re happy to say that we’re different here at Almond Financial. By keeping everything simple and by sharing our knowledge, we’ll help you understand your existing situation and we’ll offer advice you can rely on.
The value of pensions and investments can fall as well as rise. You may get back less than you invested.Final salary and defined benefit pension advice
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How our pension advice service can help
On the surface, pension planning can feel like an intimidating and complicated business.
There are big decisions to make and hard questions to face in the short term, with seemingly a whole glossary of new words to get your head around first.
So much so that many people put off the conversation for years, well past the point that they should have already started setting money aside. Lots of people, especially young adults, don’t think that they’re in a financially stable enough position to start saving.
Whatever the reason, far too few people are thinking ahead. By the time they do, they usually wish they had started much sooner.
But there’s no need to panic. Whenever you decide to get serious about a pension, there are options available to you. While it can feel complex, remember that most people aren’t experts in financial planning – they turn to trusted, expert financial advisors to help.
A big part of our pensions advice service is about explaining the jargon and breaking it all down into plain English so our clients can make decisions knowing they have all the facts.
We listen to what our clients are asking us, and then we give them the advice they need to make it happen, which means they can look to the future with confidence.
Pension Advice FAQs
Want to learn more about finding the most suitable pension options for you? We’ve put together answers to some of our most commonly asked questions below. If your question isn’t answered here, or you’re looking for tailored advice from a professional pension advisor, please get in touch today.
When should I speak to a pension advisor?
The simple answer is that it’s never too soon to seek advice about your pension. Most people in their 20s or 30s aren’t thinking about retirement, but if you are in a position to start saving, you will benefit greatly from starting early. It’s particularly important that you speak to an advisor if you’re not signed up to a workplace pension.
Large companies and public sector organisations have traditionally offered generous pension schemes, even if final salary schemes are largely a thing of the past.
If you’re fortunate to work for an employer like this, it takes away some of the pressure because you can build a substantial nest-egg if you intend to stay with the company for a long time. But if you’re in charge of planning it all yourself, or if your company only offers limited pension options, it’s worth seeking professional pension advice.
How much do I need to retire?
That largely depends on what sort of retirement you plan to enjoy and how much you plan to do. With people living longer, and staying healthier for longer, many see their golden years as being times to live out the dreams they put aside to focus on their work and building a family.
Some people plan to ‘downsize’ to a smaller house to free up cash for fun activities like travelling. Even so, you may need a higher income than previous generations wanted.
It goes without saying that the more you can save the better, but if you’re in charge of your pension planning – rather than being part of a workplace pension scheme – you have to decide what you can afford to put aside now and balance that with your future needs.
A pension advisor can work out a final savings figure based on a number of factors, which may not have occurred to you, including your current earning, outgoings, insurance policies, and investments balanced against your future plans, healthcare needs, wills and estates.
For more information, see our article: ‘How much should you save for retirement?’.
When can I access my pension?
That depends on what type of employment you are in, and also which pension you are looking to build.
As long as you’ve made enough National Insurance (NI) contributions during your working life, you will be entitled to a state pension, which kicks in when you officially retire.
The government has produced a state pension age calculator which details when you can draw your pensions depending on your age. Under current legislation anyone born on or after April 6 1978 will be eligible to draw their state pension from the age of 68. In most cases, private pensions become available upon retirement, whenever that is, however there is more flexibility here than there ever has been, and more flexibility than in a state pension.
When you retire, you have a choice of what to do with your savings – whether to invest them into a drawdown (see below), an annuity, or some combination of the two. There are also options for people who choose to carry on working into their late 60s or 70s, whereby they can draw some income from a private pension before they are officially retired.
What is pension drawdown and annuity?
A pension drawdown differs from the traditional annuity in many ways, but the key differences are around flexibility, and risk.
A drawdown pension allows the holder to withdraw money from their funds, while keeping the remainder in place as an investment. The holder may withdraw a large lump sum – potentially the entire fund if they choose, though they will pay tax on any withdrawal of more than 25%.
Another key benefit of a drawdown is that the money you leave in is still ‘live’ in that it’s still being invested, potentially earning you an income your fund appreciates in value. Of course the downside to this is that your money can also lose value as markets fluctuate.
Whereas a pension annuity, in effect an insurance policy, provides a guaranteed monthly income for life once a person has retired, but without the same flexibility. The monthly payments are fixed and can’t be changed, and the money in the pot must be taken this way – there is no option for a large lump sum withdrawal if the need arises.
What is a deferred pension?
In the case of a state or private pension, you can choose to carry on working and push back the date when you start drawing pension payments past the point of being eligible to do so.
The simplest reason you might do this is to increase your retirement income, tax-free, by leaving the money in the pot for longer. If a fund is invested on the stock market, it could increase significantly in value in that time.
In the case of annuities, you can increase the rate by waiting a little longer to retire. The key consideration here is whether you can afford to go without the money in the short term, and what your future retirement outgoings are likely to be. The government-run MoneyHelper service contains lots of excellent advice about deferring pensions.
For more information, see our article: ‘Deferred Pensions: What Are They & Should You Defer?‘.
Should I take a lump sum from my pension?
Firstly, the decision to take a lump sum from a pension fund shouldn’t be taken lightly – it’s always good to get expert advice.
There can be a temptation with a drawdown pension to treat the fund as more of a bank account than a savings pot. But taking a lump sum diminishes the overall pot size, reducing your future income potential. Once it’s gone it’s gone. And while you might be making the withdrawal with plans to make a sound investment, to make that money ‘work for you’, many do it to have some (well-earned) fun – a long trip, a new car, or some more speculative investments.
It’s also important to note that the money left in a drawdown pension is also at risk: if stock markets take a dive, so too will the value of your fund and it can take a long time to recover.
Should I consolidate my pensions?
Consolidating, also known as ‘combining’ or ‘transferring’ two or more pension pots can be a smart move if done correctly.
Consolidating pensions makes managing your affairs more straightforward. Combining it all together means that you only have one fund to keep tabs on and manage. Pooled together, the money in that fund may grow at a faster rate than it would have done divided across several pots. If you transfer all of your pensions into the most suitable fund that meets your needs, you benefit even more. As with all decisions of this kind, details are key.
It’s important to know the terms of each pension fund before you make a decision – for example some funds will charge you for ‘transferring out’. First you must get a clear view of all the pensions you hold, and all the individual terms, charges and rates they each come with before you can decide if consolidation is going to leave you better off in the long term.
What will happen to my pension when I die?
This partly depends on whether the holder dies before the age of 75 or after. What happens in each scenario is something that you can decide in advance.
If you die before you reach 75, the remainder of their pension can be paid as a single tax-free lump sum to a designated person. Alternatively it can be converted into a drawdown pension which that beneficiary can withdraw from, or converted into an annuity for them – each coming with its own pros and cons (see above).
The same three options are available if you die after 75 but beneficiaries will not receive some of the tax breaks. For example if a loved one is bequeathed a pension fund as a lump sum, they will have to pay tax on that sum. Or if you choose to convert your pension into either a drawdown or annuity fund, the holder will be taxed on the income they earn from it.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
For more information, see our article: ‘What happens to your pension after death?’.
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We treat your investments as if they’re our own
Friendly and efficient advice to help your investments thrive – it’s what we’re all about. The proof is in our customer feedback. It’s important to us that you understand your options as well as we do, so we cut out unnecessary complications and handle your case with integrity and care.
“Almond Financial were recommended to me by a friend who couldn’t speak highly enough of Sam and the team and I have to say I agree 100%. Everything is explained carefully and clearly, whatever time is needed is taken – no rush, no pressure, no gaps.
I have had a superb experience with Almond and I look forward to many more productive and rewarding years ahead.” – MG
“The Almond Financial team have been fantastic. Sam and Emma were both extremely professional and friendly and explained everything in layman terms. I have recommended Almond Financial to family and friends.” – Yolanda
“The team at Almond Financial are incredibly knowledgeable and provide an excellent service. The whole process was efficient, easy to understand and all the changes we made were in full confidence having a clear an detailed understanding of what and why – Almond Financial come very highly recommended.” – Catherine
“I cannot speak highly enough of Sam and his team especially Jake. I was looking at early retirement and Sam took his time to explain everything clearly to me and found me the best deal so I could take early retirement. Jake kept me fully updated all the time. I would highly recommend Almond to all of my friends.” – Steven
Annual reviews will keep you on track
Regular annual reviews are really important for keeping your personal financial plan on track, including looking at any changes in your circumstances.