Pension Schemes

Pension schemes made simple: how to cut through the jargon and plan for your retirement

Pension schemes are there to help you build up a little nest egg to see you through when you retire.

These schemes are designed to make sure you have an income on top of your State Pension.

The State Pension is currently set at a maximum of £164.35 per week. This isn’t enough for most people to maintain their current lifestyle into retirement. It’s therefore sensible to put money away for when you are older.

Tax advantages

Pension schemes help you to save a little bit of your income on a regular basis and can have tax advantages.

You might be worried that you are too old to start saving into a pension scheme but it’s never too late, particularly if you can also get contributions from your employer.

Saving into a pension scheme is also usually a very tax-efficient way of saving money, as all tax payers can get 20% tax relief on their contributions. Higher rate taxpayers might also be able to benefit from extra tax relief.

There’s no limit on the amount of money you can pay into a pension scheme. However, there is a limit on the amount that is eligible for tax relief.

Workplace pensions

New UK legislation made it compulsory for employers to enrol eligible workers into a workplace pension scheme by 1 February 2018, so most employed people now have one.

This could be a defined benefit, defined contribution or cash balance scheme. All of these have different features and suit different circumstances.

If you don’t have a workplace pension, you might take out your own contract for a pension scheme. You can do this with an insurance company or another pension provider.

Different options

Navigating the pros and cons of the various pension schemes when you are taking them out, or working out how to take your cash as you approach your retirement can be a minefield.

Employers are now obliged to provide a workplace pension scheme. You may set up your own, or indeed do both.

There is a lot to think about when choosing a pension scheme. We recommend reviewing yours regularly to make sure it will meet your future financial requirements.

At Amethyst we can work with you to help you choose the best plan for your circumstances and how you can best save for your future, just get in touch and we will do the rest.