A pension is basically a long-term savings plan with tax relief. Your regular contributions are invested so that they grow throughout your career and then provide you with an income in retirement. Added bonus, the government adds money to your contribution, for example you put in £80 the government tops this up by £20, that is a 25% uplift from day one!
When can I access my pension?
You can normally start taking money from the age of 55. You could use this to help top up your salary if you are still working, to enable you to work fewer hours or to retire early. In most cases you can take a tax free lump sum up to 25% of the fund value.
In the event of ill health you may be able to access your fund earlier.
I’d rather have a property investment...
Returns from ‘Buy to Let’ have been attractive in recent years; however, the Government have this type of investment firmly in their sights and have increased the taxation on property investing and generally made this option more difficult for those wanting to become a landlord. Broadly speaking, a pension is more tax efficient, allows for more diversification and typically more cost effective. You still retain the option of investing in property, within a pension, an option which you can discuss with one of our advisers.
My house is my pension...
Some people downsize in retirement but what if, when the time comes, you do not want to up-roots and leave your home? Furthermore, a property is an illiquid investment which does not easily allow you to make periodic withdrawals when you require the cash.