Evergreen Financial Limited

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Pensions & Retirement Planning

Your income in retirement will probably derive from one or a combination of the following:

a) State pension.

b) Pensions from your current and former employer or self-employment.

c) Investment income generated from your savings and accumulated wealth.

Some might ask “why bother with a pension at all?” A fair question to pose, perhaps, following all the recent bad publicity, including the Equitable Life affair and the poor performance of some pension funds in recent years.

Many people, particularly younger people, think pensions are boring, or difficult to understand, and definitely for the older set. The answer to the question "why bother" might be, “if you think pensions aren’t worth bothering with, what alternative action are you following to provide for your old age?” To which the reply is usually “nothing”.

Doing nothing, and relying upon the state, is to court poverty. The Government is already phasing-in an increase in State pension retirement age for women (from 60 to 65), is gradually raising the State pension age to 68, and has raised the age at which a person may take benefits from a personal pension from 50 to 55 (effective since April 2010). Perhaps further measures restricting or reducing benefits will follow in coming years as the State tries to shore up a creaking system.

Tax Efficient Planning & Advice

But all is not doom and gloom. Pensions are still by far the most efficient way to save for an income in retirement. The tax reliefs allowed are significant, the choice of investments is as wide as most people will ever need, and frequently an employer will contribute as well. A person who saves a reasonable sum into a pension each month throughout their working life is more likely to have a pension income in retirement that will be sufficient to maintain their standard of living.

How Much?

But how much is a “reasonable sum”? for contributions? There is no straight answer, but for a young person starting out, putting away a percentage of income half one’s age is a good rule of thumb: for example, 10% at age 20, 15% at 30, up to 20% at 40. Ideally one should save as much as one’s budget will allow, and for most people their disposable income increases with age.

The sooner you begin saving for retirement, the easier it will be to accumulate the substantial fund that will be necessary to generate the retirement income you need. Those who procrastinate will probably find their eventual fund to be much smaller than the early starter.


Retirement planning is a decision that everyone should take responsibility for.

Ask yourself at what age you like would to retire, what your financial responsibilities are likely to be and on what percentage of your current salary will you want to retire?

When it comes to providing for our retirement too many people are doing too little too late. Putting away even a small sum early on can make a big difference to the lifestyle you will enjoy when you retire.

The golden rule for most people is to not rely on the State alone as the money paid to you from your state pension may not be sufficient to meet your needs and expectations.

The sad fact is that most people do not adequately prepare for retirement and by the time they do, they are often much older and the costs of planning for retirement become that much more expensive.

Today there are a number of tax efficient ways of providing for a comfortable retirement.

The area is complex and choosing the right investment vehicle requires a detailed understanding of your personal circumstances, tax position, employment status and more.

In simple terms, when you are in employment you receive a regular salary from your employer but when you retire, that income ceases despite the fact that your outgoings still usually remain the same. A pension resolves this problem. You pay a regular sum of money whilst you are working to your pension provider who will in turn invest that money for you and when you reach your retirement age, your pension provider will pay you a regular sum of money.

The sum is paid for the rest of your life. When you retire you may also get a lump sum in addition to the regular payments.

Pensions are long-term investments with special tax rules. Since 2010 you will need to reach the age of 55 before you can access your pension funds. Some types of pension have additional rules about when you can take your pension and these vary between pension providers.

You do not have to stop working to draw your pension as long as your pension provider’s rules allow you to.

Call or email us to discuss your pension requirements. As Independent Financial Advisers (IFAs) we are able to provide you with whole of market advice to ensure that you receive the best possible advice in this complex area.



Evergreen Financial Ltd

65 London Wall

Tel: [44] 020 7631 9572
E-mail: contact@evergreenfinancial.co.uk