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Pension
planning
Q:I'd like to plan for the future but know nothing about
pensions.What are my options and how does it all work?
A:There are several different types of pensions available to you,
including your basic State Pension,which you can currently claim
from the age of 65 for men and 60 for women born on or before
5thApril 1950.The State Pension age for women born on or
after 6thApril 1950 will increase from 60 to 65 between 2010
and 2020.It will increase for both men and women from age 65
to 68 between 2024 and 2046.
You can get a basic State Pension by building up enough
'qualifying years'.A qualifying year is a tax year in which Alternatively,your place of employment may offer you a
you have sufficient earnings upon which you have paid,are Company (occupational) Pension.These are set up by employers
treated as having paid or have been credited with,National for their employees.In most cases,your employer will make
Insurance contributions. contributions to the scheme on your behalf and require that you
You may also be entitled to an additional State Pension.For make regular payments from your salary.If you leave your
instance,if you're in full-time employment and make Class 1 employer you're unlikely to be able to continue making
National Insurance contributions.When you retire and claim payments into that specific pension scheme.
for a basic State Pension,any additional State Pension due If you've been a member of a Company Pension Scheme you
will be added. may have paid a lower rate of National Insurance contributions
You can also have a Personal Pension in addition to your State which will have qualified you only for the basic State Pension.If
Pension.These are available from wealth managers,banks, you do this,most or all of your second pension will come from
building societies and life insurance companies,who will invest your Company Pension rather than the State Second Pension.
your savings on your behalf.You can start receiving an income Some employers offer access to a Personal Pension Scheme.
from a Personal Pension at 50 (increasing to 55 by 2010). They may also have negotiated lower administration costs with
There's no limit on the number of Personal Pension Schemes pension providers and make contributions to your pension
you can set up,and any contributions you make won't affect themselves.Such an arrangement is called a Group Personal
your entitlement to the basic State Pension.You can save as Pension Plan (GPPP).If you decide to leave your employer you
much as you like and each year you'll be able to get tax relief on may still be able to make payments into your pension,but you
your contributions up to 100 percent of your earnings (salary may pay higher administration costs.
and other earned income) subject to an 'annual allowance', Because there are so many pensions to choose from,and your
above which tax will be charged.In practice this means that for financial future is of such importance,it's usually best to visit a
each pound you put into your pension,the Government tops up reputable independent wealth management company who offers
your pension pot using money it would otherwise have taken free initial consultations.This means that you can discuss your
from you as tax. situation,aspirations and needs without obligation and can
There's also the option of a Stakeholder Pension which is a receive advice tailored to your requirements.If you then feel
type of Personal Pension.They have to meet certain government comfortable you can proceed with the right pension for you.
standards to ensure they're good value.Stakeholder Pensions are
open to everyone and may be worth looking into if you're self- WynThomas,FinancialAdviser.
employed or if your employer doesn't offer a Company Pension. ApplewoodWealth Management,
They allow you to contribute as little as £20 a month.You don't Oswestry,Shropshire,Tel:01691 671903
have to be working to contribute to a Stakeholder Pension,and
you don't have to contribute every month if you're unable to. Information sourced from Direct.Gov.uk
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