The key factors when planning your pension
Brexit or no Brexit, the UK is beginning to feel the impact of sustained austerity measures. This is creating considerable collateral damage throughout society, with pensioners currently bearing the brunt of reduced government spending.
Things could get worse too with Chancellor Philip Hammond expected to slash pension tax-relief in order to boost NHS spending by £20 billion over the course of the next six years. This is a significant blow to those approaching retirement, particularly with the State pension age already set to increase incrementally over time.
This requires you take a proactive approach and in this post we’ll consider the key factors that will impact the value of your pension in the future.
- Obtain Expert Financial Advice
If there’s one takeaway from the current economic climate in the UK, it’s that you cannot rely on the State pension to fund your retirement.
Instead you’ll need to optimize the value of your private and workspace schemes and to achieve this you should seek out expert financial advice.
Service providers like Tilney can certainly help in this respect, as they provide a full financial planning service that covers investments, pensions and the management of your estate.
This can help you to create a relevant and holistic financial plan, and one that should accumulate wealth over time.
- Do you Own or Rent your Property?
For many, owning a property is highly beneficial in retirement, as it provides security and a genuine store of wealth.
In many instances, real estate can account for up to 40% of individual wealth but those approaching retirement are increasingly likely to realize this by selling their homes and moving into a rental property.
While this may seem counter-intuitive, it makes sense given that Halifax has recorded a 30% rise in the value of property during the last 10 years alone. So by leveraging the value in their homes, they can access a lump sum of cash to boost their pension fund.
We should also remember that rents tend to keep up with real income on average and this can help to keep your housing costs down during retirement.
- The value of a SIPP
Staggeringly, the UK’s gross pension liability (across the workplace and the state) has grown by £1 trillion during the last five years, with both private and public sector entities struggling to meet their financial responsibilities.
With these income streams increasingly unreliable, you may want to consider investing in some form of personal pension, such as a Self-invested Personal Pension (SIPP). This type of product not only allows you access to domestic and international assets, but it also offers you access to expert wealth managers who can oversee your funds.
Some providers will even allow you to transfer your existing pension funds into a single, easy to manage plan, and (if it is in your best interests) this could prove crucial as you look to optimize the value of your estate.
