Pensions

Pensions benefit from a generous tax regime, whereby contributions receive tax relief on the first £3,600 and then on every penny up to your annual earnings from trade profession or employment, subject to an overall annual allowance set at £225,000 for 2007/8 and rising thereafter.

The funds within a pension fund are able to grow without tax on income or capital gains (other than the 10% withholding tax on dividends from UK companies, which can no longer be reclaimed).

When you come to retire, you can take up to 25% of your fund as a pension commencement lump sum (currently free of tax) and the balance can be used to purchase an annuity or to draw an income directly from the fund of anything from zero to 120% of the annuity that could be purchased by a person of the same age and sex. Any income thus generated is taxed as earned income.

At age 75 the rules change so you must draw an income of between 55% and 90% of the annuity for a person aged 75, each year. New rules mean any money left on death after age 75 which is not used to provide benefits for a dependent or given to charity will be subject to a punitive tax charge of up to 82%.

Your fund should not exceed the lifetime allowance (set at £1.6 million for 2007/8 and rising thereafter) or you will be subject to an unauthorised payments charge of 55% on the excess.

Investment strategies can be highly flexible and in addition to using an insurance company, you can also arrange a Self Invested Personal Pension which allows you to invest directly in a wide range of assets, including shares, gilts, cash, commercial property and so on.

We can help you to select a pension to help you achieve your personal goals in a balanced way.

To discuss your requirements or for further information, please Contact us.


THE VALUE OF INVESTMENT IS NOT GUARANTEED BUT WILL FLUCTUATE. YOU MAY GET BACK LESS THAN YOU INVEST.