Pensions remain a useful saving and wealth-succession tool. Historically, there has been a definite incentive to maximise contributions to ensure a comfortable retirement. However, governments in recent years have made major changes to the rules regarding pensions, making it difficult for individuals to plan for the future with confidence and assurance.
The present landscape is slightly more settled, with few changes anticipated in the coming years. With certainty comes confidence, and the current legislative framework is providing both domestic and international planning opportunities for those seeking to maximise the value of their pension savings.
Tax relief is obtained at your marginal income tax rate on the value of pension contributions up to an annual allowance, plus any unused relief available from the three previous tax years. Exactly how much can be contributed also depends on an overall lifetime allowance limit, depending on the type of scheme involved.
In some scenarios it might even be that your pension no longer provides the best home for your long-term savings. We can help you consider alternatives such as:
- using a spouse’s pension allowance to provide a joint income in retirement;
- investing in ISAs. In this case, no relief will be given on the contributions, but the investments are in a similar tax-free environment for growth as pensions, and suffer no tax on withdrawals;
- looking at other investments that give immediate tax relief on contributions, such as the enterprise investment scheme and venture capital trust investments;
- utilising overseas pensions vehicles; and
- saving through other wrappers such as offshore bonds or personal investment companies.
If have an existing pension overseas or, are considering contributing to one or transferring your UK pension to an overseas plan, RSM is able to provide UK tax advice on the issues. We have particular expertise in advising on all types of non-UK pension plan, with the most common ones listed below. Our advice usually encompasses making contributions to and taking lump sums or pensions out. Exit planning is often combined with a relocation abroad and in these cases, we are able to provide advice on leaving the UK and settling in another country in conjunction with our international RSM firms.
- Qualifying Recognised Overseas Pension Schemes (QROPSs);
- Qualifying Non-UK Pension Schemes (QNUPSs);
- International Pension Plans (IPPs);
- Employer Financed Retirement Benefits Schemes (EFRBS); and
- Employee Benefit Trusts (EBTs).
Pension planning can be complicated, which is why we recommend that you take specialist advice. We have significant experience in this area and can assist you to ensure that you are maximising tax relief from your contributions, making the most of allowances within your family and ensuring that you can withdraw from your pension pot without paying unnecessary tax.
Please do not hesitate to contact one of our experts to find out how we can help.
