Your State Pension

The Basic State Pension

 The State Pension is funded through your National Insurance Contributions (NICs), which are paid as a percentage of your earnings. You need to have made a minimum of 30 years contributions to receive the full basic pension.

 

The current Basic State Pension for tax year 2014/2015 is:

  • Single Person receives £113.10 per week
  • Married Couple receives £180.90 per week

Currently Men can claim their pension at age 65, while Women can claim theirs between 60 and 65 depending on their date of birth. From 2018 both men and women will receive their State Pension at 65, this will increase to 66 between 2018 and 2020. It gets worse, the Pensions Bill 2013 proposes to increase the State Pension Age to 67 between 2026 and 2028, then 68 between 2044 and 2046.

 

To find out at what age you are due to receive your State Pension, click on this https://www.gov.uk/calculate-state-pension

 

 

Saving for a pension allows you to take advantage of tax relief offered by the government. So for every contribution you make, (subject to a limit of £50000 in tax year 2013/2014 - This is known as the Annual Allowance) the government will add 20%. So as an example, if you were to contribute £200 per month, the government would add £40, making the total monthly contribution of £240.00. These figures are for basic rate tax payers, higher and additional rate taxpayers can claim even more tax relief.

 

Stakeholder Pensions

 

This type of pension has been designed to have low and flexible minimum contributions, you can invest from as little as £20.00 gross per month, although the more you contribute into your pension, the better chance it will have of achieving your retirement needs. Stakeholder pensions must meet minimum standards set by the government. These include:

  • Limited charges - The annual management charge is capped at 1.5% or less.
  • Flexible contributions - You can stop, start, increase or decrease regular contributions, and pay in a lump sum at any time.
  • Penelty free transfers.
  • A default investment fund - your money will be invested into a default fund if you do not want to choose the funds.

The funds are usually invested into stocks and shares, with the main aim being capital growth of the fund in the years up to retirement. You can usually choose from a selected range of funds to invest in, but remember the values of this type of investment may go up or down in value.

 

 

Personal Pensions

 

Personal pensions are similar to stakeholder, in that they are a 'Defined Contribution' pension. You will also qualify for the same tax relief on contributions, but personal pensions do not have to have the same government minimum standards. Charges are usually lower than that of a stakeholder, and have been now for many years, but this is not guaranteed to remain. The main advantage to a personal pension is a greater choice of pension funds.

 

The amount of income provided by your pension fund will depend on a number of things, including the amount paid into the pension fund, charges, investment returns and the annuity rates available to buy your pension income when you decide to take your benefits.

Contact

Tel:   07711 005774

Fax: 0191 5006767

E-mail: tony@emhfp.co.uk

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EMH Financial Planning

11 Constable Gardens

South Shields

NE34 8LR

 

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