To draw pension now or not to draw? 2009, a difficult time!
Wednesday, April 29th, 2009We live in unprecedented times in most aspects and areas of financial planning. But for those who had planned to retire in 2009, there are some difficult decisions to be made in light of the current economic climate. With fund values and annuity rates having fallen and the real rates of costs increasing (CPI 3.5% March 2009) it is an anxious time for many.
In my view, taking financial planning advice has never been so important for retirees and potential retirees in this climate. Starting the advice process early is vital, years in advance, to ensure that retirement is as comfortable as was anticipated when the client first started saving all those years ago.
So why start planning so early? In my view, this is because of the many options that are available for retirement benefits and that fact that each client is different, with different expectations, anticipations and assets available to meet these requirements.
Taking this a stage further, we need to consider what options are available for retirement income and, in the current climate these may, or may not be, beneficial.
I do not believe that taking retirement benefits now is a poor option, although it may require a little more careful planning and lateral thinking to make the outcome as effective as possible. There are pitfalls if advice is not taken. As ever, the ability to take independent advice is more important then ever.
Please note that the information outlined in this document is not intended as personalised investment advice and may not be suitable for everyone. You should seek independent financial advice.
Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority
Deferring retirement and your State Pension
Wednesday, April 29th, 2009Deferring state pension is very much an option at this time, especially for those who may not have planned to take pension benefits now. These may include those being made redundant at a later stage in their working career. Dependent on the circumstances, using other savings (or a redundancy payment) to subsidise income in the shorter term may be a real option if the pension fund value has fallen and needs to recover. However, a cautionary note needs to be added here. The minimum retirement age is increasing from 50 to 55 from 2010 and some may fall into a trap of having access to their funds one year and having this withdrawn the next. To reiterate, it is the advice at this stage after careful consideration of the situation that will guide a client appropriately. If someone continues to work past their state retirement age, they can also defer their state pension. The advantage of this is that this pension increases by 1% for ever 5 weeks deferred. This amounts to about 10.4% for a full year and this can be valuable in the right situation.
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. This information is for guidance only and cannot be relied upon as individual advice.
A new tax year and an increase in the inheritance tax (IHT) threshold.
Monday, April 6th, 2009A new tax year and an increase in the inheritance tax (IHT) threshold.
Today is the beginning of the new tax year 2009/2010. This will mean that new tax allowances are available to UK individuals, such as ISA allowance (maximum £7,200) and Capital Gains Tax allowances (CGT allowance increasing at £10,100 for 2009/2010).
In addition, the inheritance tax threshold is increasing from £312,000 to £325,000 for 2009/2010, with the annual gift allowance remaining unchanged at £3,000 in a tax year per individual gifting away. Don’t forget that the ‘Surplus income’ allowance is still available, if appropriate and relevant to your individual financial planning.
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. This blog is for information only and is not intended as individual advice.
