Pensions remain a useful saving and wealth-succession tool. Up until now there has been a definite incentive to maximise contributions to ensure a comfortable retirement. But, with pension changes rife, will that momentum continue and what are the alternatives?
Governments in recent years have each made major changes to the rules regarding pensions, making it difficult for individuals to plan for the future with confidence. More changes are coming into effect in April 2016, but there are planning opportunities now.
Tax relief on your pension is obtained at your marginal income tax rate on 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.
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; and
- saving through other wrappers such as offshore bonds or personal investment companies.
If you have a pension overseas, RSM is able to provide UK tax advice on:
- Qualifying Recognised Overseas Pension Schemes (QROPSs);
- Qualifying Non-UK Pension Schemes (QNUPSs); and
- International Pension Plans (IPPs).
Pension planning can be complicated, which is why we recommend that you take specialist advice. We have significant experience in pension planning, and can assist you to ensure 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.