Cave & Sons


Pensions – why everyone should have one


For many years, pensions have been viewed as boring, expensive and locked away forever, not providing any real return on your mon- ey. In reality, these opinions are mostly false, with pensions actually providing one of the most tax efficient types of investment available. As an example, for every £80 saved into a pension, before any in-


vestment performance, the government top this up to £100, with higher and additional rate taxpayers currently able to claim further tax relief through their self-assessment return. For those with earnings over £100,000 per year, a personal pension contribution could also result in them regaining some/all of their personal income tax allowance


42 ALL THINGS BUSINESS


Scott Newbould CCBI PFA, Cert CII (MP)


(depending on the level of contribution and their level of earnings), in turn, generating an effective rate of tax relief of 60%. I don’t know about you, but I don’t know of any other types of investment which can give a return of 60% before the money is even invested. Most investment platforms will also now allow


you to hold the same range of investments within your pensions as you can in your ISA or general investment portfolios. Tis means you have a large choice of investment options and if you have certain investments you prefer, these can likely also be held in your pension, rather than just being restricted to a particular provider’s own list of ‘recommended’ funds.


Retirement saving As well as being able to provide beneficial reliefs and tax efficiency in respect of the investments held, pensions are also the main vehicle used to save for retirement. Some of us may be fortunate enough to have a Defined Benefit (DB) pension scheme, which provides a guaranteed income for the rest of our lives, but for the not so lucky (my- self included), we must build larger pension pots


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