Retirement
Successive Governments have worked hard to encourage people to make adequate provision for retirement, because they know that State Benefits are simply inadequate.The Government offers generous tax concessions to help people build up capital, via pension arrangements, that will provide vital income during retirement.
Let's take an example of someone paying 40% Income Tax on the top £1,000 of their income. After tax, they are left with £600. It could take them many years to see their money grow back to £1,000 - which is exactly where they started from in the first place.
On the other hand, if this person invests the money in a pension plan, the £600 is immediately credited with the tax paid i.e. £400 and the full £1,000 is invested. On top of that, the pension fund currently enjoys tax concessions which means the money has the potential to grow faster, freed from some of the ravages of taxation.
This is based upon our understanding of current tax legislation, which may be subject to change.
When it comes time to draw the pension benefits, a number of attractive options exist, including a tax-free cash entitlement. Furthermore with modern pension plans, there is no longer the need to be forced into buying an annuity either. Depending on the monies available, more flexible way can be found of generating an income from your pension in a way that your family doesn't lose out if you die prematurely.
To find out more about tax-efficient ways to provide for retirement, please contact us.
Arthur Beverly Financial Management LLP is authorised and regulated by the Financial Services Authority.