what your pension can do for you

Each of your pensions will be set up with a selected retirement age. This may be the age you are now when you’re thinking of accessing your savings, or it may not. You will need to check with each provider to find out if you have any flexibility to change the age you take the pension, to take it either earlier or later than the age they hold for you. You then need to let each provider know when to start paying your pension to you.

At Sapphire Financial Planning we can help you understand the paperwork you have for your plans and what your options are.

Over a working life it’s very likely you have collected a few different pensions. Each of these will pay you a pension which can result in receiving lots of payments throughout a month. If you would find it easier to receive fewer payments we can assess your situation..

At Sapphire Financial Planning we can help you understand the paperwork you have for your plans and what your options are. We can help explore the best option for you, taking into account all the different features your existing pensions will have.

If you have a defined benefit pension through your current or old employer then you need to follow the rules of that scheme which will state when you can start accessing that pension.

For most other pension plans you can start accessing your pension funds from age 55 (rising to 57 from 2028), either for the tax-free cash, an income, or both, all without needing to retire.

You can start taking a pension income, although this generally isn’t sensible if you don’t need the additional income and have other income, as you do pay income tax on pension income.

You can take 25% of your pension fund as a lump sum up to your lifetime allowance without paying any tax on it. The remaining money will stay invested and be available to pay an income to you when you need it.

When you make a decision to do this you need to think of this as taking money from probably the most tax-efficient account you have. Could you leave this money in the pension and use any other savings you have instead? And it doesn’t make sense to take it just to put it into another savings account, where it will start to be taxed.

It will always be there for you, and remember if your pension investment grew then in future you will still be able to take 25% of a bigger pot. However, remember if your investment was to fall the amount of the lump sum will be smaller.

At Sapphire Financial Planning we can give you a personal plan explaining what your options are and what is best for you.

The clearly depends on the amount of savings in your pension fund and how much income you realistically feel you need. At a time of flexible pensions you can even draw money straight from the fund to spend, but you can imagine the value of your pensions savings dramatically reducing each month, with the real risk one day there could be nothing left.

So the question is also, will my pension savings last for as long as I need them to?

At Sapphire Financial Planning we can help you balance what is important to you, sufficient income for now and the future, with the level of certainty it could be maintained that you feel comfortable with, and also taking into account any need your family may have for the pension income if you were to die.

We will recommend the best option for you, giving you peace of mind when making a most important decision at the start of your retirement.

Some pension plans are more flexible than others. You may find some company pensions don’t let you choose. With other pension plans it depends on the income option you now take.

At Sapphire Financial Planning we can help you understand the paperwork you have for your plans and what your options are.

Not necessarily. Each of your pension plans will be set up with a selected retirement age. This may be the age you are now, when you’re thinking of accessing your savings, or it may not. You will need to check with each provider to find out if you have any flexibility to change the age you take the pension, to take it either earlier or later than the age they hold for you. You then need to let each provider know when to start paying your pension to you.

At Sapphire Financial Planning we can help you understand the paperwork you have for your plans and what your options are.

Income tax is payable on pension income in the same way as your employed income. You still have your same personal allowance which for the 2024/25 tax year allows you to earn £12,570 before paying income tax.

At Sapphire Financial Planning we look at all your options and advise you on your personal circumstance. This includes looking at what income you’re already received in the tax year and what other savings you may have, all to help you retain more of your savings for you, reducing tax payable to the taxman.

Your pension plan is probably the most tax efficient saving you have, and it should be viewed alongside any other savings you have.

If you have significant other savings, it can make sense to take money from these other accounts first to use as an income. Remember any withdrawals from ISAs are giving you tax free Income, Dividends and free from Capital Gains Tax.

If you have a large estate which may mean inheritance tax would be payable if you died, it can make sense to leave your savings in your pension which isn’t counted in the value of your estate, and spend your other savings instead. This will also reduce the value of your estate that tax would be payable on.

At Sapphire Financial Planning we can give you a personal plan explaining what your options are and what is best for you.

Tax is an unfortunate reality however with careful planning the amount of tax due can be addressed. Your pension fund provides you flexibility and options to manage the tax you pay, from income tax to inheritance tax.

Any money you personally pay into a personal pension will reduce your adjusted net income by the gross amount of your pension contribution. This effectively reclaims some or all of your personal allowance for income tax, resulting in you paying less tax on your income. Any money in a pension fund stays outside of your estate when you die, so it doesn’t count towards your inheritance tax allowance.

At Sapphire Financial Planning we look at all your options and advise you on your personal circumstance.