Retirement planning

Retiring from work used to mean just that – stopping completely. But nowadays many of us choose to continue to work flexibly in our retirement; part-time, or self-employed. We also have more options available to manage our retirement income flexibly than ever before.  

Whether you need to start planning, or take another look at your existing retirement strategies, we can help you make the most of your retirement from day one.  

Choosing how we manage our money aiming to have enough to live comfortably in later life is a highly personal choice.   

Let’s turn later living into greater living. 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and can fall as well as rise. You may get back less than you invested. 

Maximising your pension fund

Retiring flexibly, on your terms, is a fantastic feeling. But with it comes the need to make your money last as long as you need it to. This is the time of life to embrace tomorrow, and to do that, you’ll want to use your pension fund carefully, so you take as much as you want to, when you want to.  

Pensions are still highly tax-efficient. Subject to certain limitations, you get tax relief at your highest rate of tax on your pension so it can play a key role in your retirement planning. This assumes that anything over the basic rate of tax is reclaimed on your tax return.

Tapered Annual Allowance

The top line is, that from 6 April 2016, the annual allowance, now £60,000 per annum was reduced – or tapered – for high earners.

Prior to 6 April 2020, if you had total adjusted income in excess of £150,000 per annum, you would have seen the annual allowance, which was £40,000 at this point, reduced by £1 for each £2 this is exceeded, to a minimum of £10,000.

Between 6 April 2020 and 5 April 2023, if you had total adjusted income in excess of £240,000 per annum, you would have seen your annual allowance of £40,000 reduced by £1 for each £2 this is exceeded, to a minimum of £4,000. This is important when reviewing Carry Forward, which is mentioned later.

With effect from 6 April 2023, tapering occurs where you have adjusted income in excess of £260,000 per annum. This means that you will see your annual allowance reduced by £1 for each £2 over £260,000, to a minimum of £10,000.

The Tapered Annual Allowance is a complex area, and you may well wish to take expert financial advice on this. Do get in touch with us if you have questions.

Carry Forward of unused reliefs

You may be able to contribute more than the current tax year’s Annual Allowance of £60,000, or your tapered annual allowance if applicable, and potentially receive tax relief at up to 45% (assuming that anything over 20% is reclaimed via your annual tax return) using Carry Forward.  This would happen if you have contributed less than the Annual Allowance in the previous three tax years and were a member of a UK registered pension scheme during that time. As this is a potentially complex area, particularly where Defined Benefit schemes are concerned, we do recommend that you take expert advice. 

Lifetime Allowance

There will be no Lifetime Allowance tax charges payable from the 2023/24 tax year, with the Lifetime Allowance due to be abolished in the 2024/25 tax year. Therefore, we recommend that you make sure that you’re making the most of this as part of your retirement planning. Please get in touch if you would like to review your plans, or with any other questions.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax reliefs depends on individual circumstances. 

Planning your retirement

Your retirement will hopefully be a long and active one, so it’s importantly to get the financial planning right. It may be the first time for many years that you genuinely have the freedom to live life the way you want to, and we want to support you in that.  

You can use these products, in different combinations, at any stage of your retirement to suit your changing circumstances. 

  • Self-Invested Pension Plans (SIPPs) 
  • Trustee Schemes 
  • Retirement Plans 
  • Drawdown Plans 
  • Annuities 

As there is now considerable choice and flexibility around pensions and retirement financing, you’re welcome to ask us for advice as often as you need.  

You can also use our retirement calculator to see what you’d need to save in order to have the money you’ll need when you retire. This figure considers your projected income from existing funds.  

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Nearing retirement

Once you retire, or semi-retire, the income sources you have now may be replaced by money from your pension. That’s what it’s there for! 

You could choose to use your pension fund to buy an annuity from an annuity provider. Annuities can guarantee you an income for life, no matter how long you live. 

Another option is Pension Drawdown, which means you can take an income from your pension fund, rather than buying an annuity. There are certain important risks to consider with drawdown, and we strongly recommend that you take specialist advice.* 

The 2015/16 pension reforms changed retirement planning significantly. 

  • You now have full access to Defined Contribution (DC) pensions from age 55, rising to 57 from 2028, with unrestricted income available, subject to paying your marginal rate of Income Tax on any taxable withdrawals. It is possible to take up to 25% of the pension fund as tax-free cash, up to £268,275. If you have any forms of Lifetime Allowance protection, you may be able to access a higher amount of tax-free cash.
  • A Defined Contribution pension can now be passed to anyone after death, not only dependants. Income taken from the DC pension by beneficiaries will be tax-free if you are under 75 when you die. If you die after this, the income will be taxed at your beneficiary’s marginal rate.  
  • These changes were good news for pensions. More flexibility means that taking expert financial advice - to help provide lifelong protection for your retirement savings - is more important than ever. The advice you take, and the choices you make, can help make a lifelong difference to the quality of your retirement and to your personal financial wellbeing.  

*The level of income from pension drawdown is not guaranteed. There is a very real chance that you may need to reduce your drawdown income in the future, in particular if the performance of your investments is lower than expected, or you live to a greater age than originally anticipated when choosing your initial income level. 

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.  

Self-Invested Pension Plan

Self-Invested Pension Plans or SIPPs mean you have a much greater range of investment options than those available through most traditional pension plans. You could choose to invest in a number of assets and asset classes including equities, unit trusts, gilts, and commercial property. This way, you can build a more diverse portfolio and help spread your risk. 

SIPPS also mean that you can make tax-efficient pension contributions, as well as being a flexible option.  

This flexibility allows you to spread the risk, especially if some investments don’t do as well as you’d hoped. However, SIPPs do tend to have higher costs than a standard pension and you need to manage them actively, and identity investment choices that might be under-performing.  

Active management is not something we expect everyone to feel confident in doing, or to have the time and the desire to do. This is why SIPPs will not be suitable for everybody and generally only those who are fairly experienced at actively managing their investment should consider this type of investment. 

And the good news? The investment growth within the fund is currently free from all UK Income and Capital Gains Taxes. 

The value of a SIPP can fall as well as rise. You may get back less than the amount invested. 

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.  

Employed

There is one golden rule with retirement planning. 

Work out how much money you think you are going to need after you retire. 

If you don't start planning for it now, there’s a real danger you could outlive your savings, no matter when you intend to retire. Quite soon, we may be spending as long in retirement as we did in employment.  

St. James's Place has a range of plans to help provide for your retirement and is always ready to help and answer your questions, no matter what stage of planning you are at. Flexibility is key, as your needs will change as your future earnings and career evolve. 

The value of a pension will be directly related to performance of the funds selected, and will fall as well as rise. You may get back less than the amount invested. 

Employer

Pension legislation and the way benefits are provided have changed vastly over recent years and the introduction of auto enrolment has had an effect on all employers, no matter how small.

As a director or business owner, it is your obligation to understand this legislation, what the process will be, how it will work, what duties you must comply with and when to act.

You may need help and advice to understand:

  • requirements surrounding auto enrolment and ensure they are compliant with legislation
  • extra administrative burden as a result of auto enrolment
  • pension benefits when recruiting new staff
  • future changes, either legislative or company-specific.

St. James's Place has relationships with a number of carefully selected market leading pension providers, allowing us to advise on a range of pension products.

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Auto-Enrolment products are not regulated by the Financial Conduct Authority.

Self-employed

Being self-employed means that you cannot join occupational pension schemes, although you will receive the Basic State Pension as long as you have paid enough National Insurance contributions. 

This means you need to make your own personal plans to retire when and how you want to, and on your terms.  

But how much will you need? 

We help many clients through this stage of their lives, offering expert guidance on all aspects of retirement from later-life plans to long-term care and passing money on to the next generations. As always, we put you at the heart of everything we do. 

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. 

Trustees

Trustees play a vital role if you are planning or running a defined benefit scheme. In a nutshell, Trustees ensure that the scheme benefits are protected for members of the Trust. 

It’s good to be forewarned that it can be a complicated, time-consuming, and often expensive process. If you are a Trustee, or have been approached to become one, there are a number of solutions that can help Trustees.  

Through Professional Trustee Solutions, you can find a bespoke strategy for incorporating cost-effective actuarial and administrative services combined with the St. James's Place distinctive approach to investment management. 

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. 

Find an adviser

Our experienced advisers offer professional, tailored, face-to-face advice based on your current circumstances and future aspirations. Start your journey now and find a St. James's Place Partner in your local area.

SJPWM-Crop-Blue.svg

St. James's Place Guarantee

St. James's Place guarantees the suitability of the advice given by members of the St. James's Place Partnership when recommending any of the wealth management products and services available from companies in the group, more details of which are set out on the Group's website.