Devonshire June July 16

Independent Financial Adviser
Celebrating 24 years of Business in East Devon
MANAGING your MONEY
Overlook pension planning
and you could be missing out
Helen has been advising clients
in the East Devon area for the
past 24 years and specialises in
the provision of retirement and
investment advice.
To find out more about her practice,
you can view her company website
at: richmondindependent.co.uk
01395 512166
Helen Mulvaney
BA (Hons), Dip M, DipPFS
Proprietor of Richmond Independent
Over the last year I have come across
quite a few customers who have
been trying to save for retirement
using bank/building society
accounts or even National Savings.
I also met up
with my young
niece recently
who
quickly
told me that
she's invested in
rental property
as her retirement
plan "because we don't believe in
pensions". Since the conversation
was at a social event I decided not to
get involved in a long discussion on
the merits, or otherwise, of pension
plans. However, this did make me
think that there's a huge amount of
mistrust and/or misunderstanding of
pensions and that clients sometimes
positively avoid them. So I decided
in this article to put a few points in
favour of the pension plan as a way
of saving for retirement.
Here are a few comments I've
recently come across:-
"Saving in a bank or building
society is simpler and less
complicated"
The problem at the moment with
banks, building societies and
National Savings is that the returns
are very poor. In fact, once inflation
starts ramping up you might be
Changes to the
State Pension
will mean lower
pensions
losing money in real terms. You
also miss out on valuable tax relief
by ignoring pensions. If you make
a contribution directly to your
personal pension and obtain tax
relief at source,
you can increase
your payment
via tax relief at
20% from the
taxman.
This
means for every
£80 you invest,
the government will top-up your
contribution by £20. This is even
the case if you are a non-tax payer.
Once invested, your fund enjoys a
tax favourable environment which
helps your retirement fund to grow.
"The charges on pensions
outweigh the benefits"
Many people are confused by charges
and in the past pension charges were
indeed very complicated. Fund
management, administration and
advice on pensions all have a cost
but these charges are probably lower
and more transparent than they have
ever been.
"We are going to rely on the State
Pension"
Changes to the State Pension will
mean lower pensions for many
of the younger generation.
This
is because they will not be able
to build up the additional state
pension benefit and will have a flat
rate basic state pension only. With
a growing population of retirees,
pressure on the welfare state and
the introduction of auto enrolment,
State Pensions might become less
generous and take longer to access.
Most people will need a retirement
plan of some sort to survive through
retirement and a tax advantageous
savings plan (a pension) is probably
the best strategy. Future generations
will also have to wait considerably
You miss out on
valuable tax
relief by ignoring
pensions
longer to be able to claim their
State Pension. The government
has promised regular reviews on
mortality rates and this will almost
inevitably mean a longer wait for
State Pensions.
I hope this article has clarified
a number of points and helped
readers to appreciate that personal
pensions are simply tax-efficient
savings plans which can help you
build up your own retirement funds.
Misconceptions, mistrust and a lack
of understanding can often act as
a discouragement which prevents
investment into this valuable
product. We will be answering more
questions in our next article.
Please note pensions are a long term
investment. The capital you invest
may go down as well as up and you
may not get back the full amount
invested. Pensions legislation and
tax treatment can and may change
in the future.
Please contact Helen Mulvaney of
Richmond Independent for further
details. Tel 01395 512166.
Richmond Independent is a trading name of
Investment & Financial Solutions Partnership
LLP which is authorised and regulated by the
Financial Conduct Authority
If you would like to read more of
Helen's articles visit her new website:
www.richmondindependent.co.uk
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