The most radical changes to pensions in almost a hundred years
In April 2015, the Government introduced the most radical changes to pensions in almost a hundred years. From April last year, individuals from the age of 55 with a defined contribution pension can now access their entire pension flexibly if they wish.
Annual and lifetime limits
Tax relief means some of your money that would have gone to the Government as tax goes into your pension instead. You can put as much as you want into your pension, but there are annual and lifetime limits on how much tax relief you get on your pension contributions.
New rule changes
The State Pension changed on 6 April 2016. If you reached State Pension age on or after that date, you’ll now receive the new State Pension under the new rules. The aim of the new State Pension is to make it simpler to understand, but there are some complicated changeover arrangements which you need to know about if you’ve already made contributions under the previous system.
Secure income for life
A defined benefit pension scheme is one where the amount paid to you is set using a formula based on how many years you’ve worked for your employer and the salary you’ve earned rather than the value of your investments. If you work or have worked for a large employer or in the public sector, you may have a defined benefit pension.
More choice and flexibility than ever before
Following changes introduced in April 2015, you now have more choice and flexibility than ever before over how and when you can take money from your pension pot, but it’s essential to obtain professional advice to decide what the best course of action you should take, as this will be your retirement income for the rest of your life.
Providing a financial safety net for your loved ones
Getting the right life insurance policy means working out how much money you need to protect your dependants. This sum must take into account their living costs, as well as any outstanding debts, such as a mortgage. It may be the case that not everyone needs life insurance (also known as ‘life cover’ and ‘death cover’). But if your spouse and children, partner, or other relatives depend on your income to cover the mortgage or other living expenses, then the answer is ‘yes’.
Guaranteed financial protection that lasts for the rest of your life
A whole-of-life insurance policy is designed to give you a specified amount of cover for the whole of your life and pays out when you die, whenever that is. Because it’s guaranteed that you’ll die at some point (and therefore that the policy will have to pay out), these policies are more expensive than term insurance policies, which only pay out if you die within a certain time frame.
If the worst does happen, it’s important to make sure you’re financially protected
We never think a critical illness is going to happen to us, especially when we feel fit and healthy, but it can and does. If the worst does happen, it’s important to make sure you’re financially protected against the impact a critical illness could have on you and your family.
No one is immune to the risk of illness and accidents
No one likes to think that something bad will happen to them, but if you couldn’t work due to a serious illness, how would you manage financially? Could you survive on savings or sick pay from work? If not, you may need some other way to keep paying the bills – and you might want to consider income protection insurance.
The limit on how much can be saved in an ISA each year has doubled since 2009; you can add up to £15,240 to an ISA in the 2016/17 tax year. Cash that you withdraw from a flexible ISA can be replaced during the same tax year without counting towards your annual ISA allowance, which is known as ‘ISA flexibility’. What sets ISAs apart from other savings and investment accounts is that any interest on cash savings, gains from investments or income from dividends are tax-efficient, and you don’t have to declare ISAs on your tax return.
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