Tailoring how you receive your state pension can boost income
remains over whether the UK Government will cut pension tax reliefs and allowances in an attempt to reduce public spending.
If you’ve still got a few years to go before retirement, you should think about boosting your pension savings now so that you can benefit from current rates of tax relief and potentially enjoy a higher income when you stop work.
Basic rate taxpayers receive tax relief at 20% of pension contributions, which is automatically added to their retirement pots.
If you’re a higher or additional rate taxpayer, you can claim an extra 20% or 25% through your self-assessment tax return. A pension contribution of £1,000 can cost a top-rate tax payer as little as £550.
Fourthly, see if you qualify for higher annuity income.
If you smoke, drink heavily or have health problems, then you could qualify for an impaired life or enhanced annuity.
These can offer much more income than standard annuities as pay-outs reflect your reduced life expectancy.
An enhanced annuity pays you a guaranteed income during retirement which is guaranteed for the rest of your life.
Even if you think any condition you have is relatively minor, it is always worth finding out whether you could qualify for this type of annuity as it could give a substantial boost to your retirement income.
Finally, combine your pension pots.
If you have several with different providers, it may be a good idea to combine them.
This will make it easier to keep track of your overall savings and estimated income at retirement.
There can be benefits to consolidation as many older-style pensions do not offer access to the new range of pension freedoms.
It could also be a good idea to consolidate if one or more pension pot has an inappropriate level of equity exposure, or is languishing in a poorlyperforming fund.
Other schemes, such as defined benefit or final salary pensions, can be transferred but this will not be suitable for everyone. Any decision to transfer should not be taken lightly as you could lose valuable and sometimes guaranteed benefits.
It is important people take time to understand the pros and cons of consolidation and are clear on whether it’s right for them. This is where professional financial advice will really add value. Scottish families seem to be shying away from difficult conversations, with more than half (51%) never discussing inheritance matters, according to new research from Brewin Dolphin.
The poll revealed more than a quarter (29%) of people in Scotland have not discussed the subject with loved ones because they’re not old, so it’s not seen as a priority.
While one-third (32%) of people in Scotland don’t feel comfortable talking about their legacy with anyone, there are some life events that may prompt people to talk to loved ones about this important subject.
Brewin cites health scares (54%), getting older (52%) and near-death experiences (49%).
Liz Alley, head of financial planning at Brewin, said: “People generally don’t like talking about money or death. However, our research shows that around one in 25 people in Scotland would like to talk about it but haven’t found the right time and some people just don’t know where to start (6%).
“We want to encourage families to sit down together and talk about their wishes.”