Pension planning

Pensions are a useful saving and wealth-succession tool. However, changes to the rules have made it harder for individuals to confidently plan for the future. We can help you navigate the complicated world of pensions and make sure you understand how tax will affect your retirement income.  

The legislative framework for pensions gives rise to domestic and international planning opportunities that can maximise the value which can be distributed from your pension savings.

At present, you can benefit from tax relief at your marginal income tax rate on the value of pension contributions up to an annual allowance. You can also take advantage of any unused relief from the three previous tax years. 

However, it’s wise to consider whether your pension savings will meet your financial expectations once you have retired, especially for high earners who are only able to contribute minimal amounts to their pension annually. Unexpected tax bills may also arise if your pension pot grows beyond an upper limit known as the lifetime allowance.

We can help you understand the tax issues arising and options you may have in respect of your contributions and when the value of your pension savings exceeds the lifetime allowance.  We can also advise you on the tax benefits of alternative strategies for funding your retirement, such as using a spouse’s pension allowance, or investing in ISAs or investments that offer tax relief on contributions, like the enterprise investment scheme and venture capital trust investments.

More complex solutions include contributing to or transferring your existing pension savings to an overseas pension structure and saving through other wrappers, such as offshore bonds or personal investment companies. In some cases, moving abroad for your retirement can provide significant tax savings when accessing your pension pot. We can provide you with the tax advice required to evaluate the various options open to you. 

We have particular expertise in advising both UK and non-UK residents on the tax impacts of contributions to and distributions from all types of non-UK pension plans, including pensions pots which have accumulated through working overseas.  The most common types of non-UK pension plans which we see are:

• Non-UK occupational pension plans;
• International Pension Plans (IPPs);
• Employer Financed Retirement Benefits Schemes (EFRBS);
• Qualifying Recognised Overseas Pension Schemes (QROPSs);
• Qualifying Non-UK Pension Schemes (QNUPSs); and
• Employee Benefit Trusts (EBTs).

In summary, we can advise you how to withdraw your pension in a way that is tax-efficient and right for you. If you’re retiring abroad, our RSM International network can help you with any local tax exposure and filing requirements.

The tax treatment of pension exits can be complicated, which is why we recommend that you take specialist advice when you are thinking of accessing your pension funds. Contact one of our experts to find out how we can help.