The first Autumn Statement under Theresa May’s new government announced a few changes to the pensions sector, which may affect those looking to save for retirement. A major change was that the amount individuals can save into a pension once they have already taken some money out has been reduced. It used to be a maximum contribution of £10,000 a year but has been cut to £4,000 from April 2017. This will mainly affect those aged 55 and over, but those looking to save for a pension now may need to adapt their plans as well.
Research has found that on average people believe they could live comfortably in retirement on £23,469 a year, but in reality are only saving the equivalent of enough for an annual income of £15,600. In order to ensure you have enough alongside a state pension, which has increased to the equivalent of £7,582 a year for anyone retiring after April 2016, budgeting efficiently is essential. Work out how long it is until you intend to retire, how much you think you’ll need to save each year and identify where cuts can be made.
Consider a SIPP
To help top up your state pension, investing in a self-invested personal pension is a great option. There are various tax benefits it provides, whether you’re a regular or higher-rate taxpayer. Plus, you can pass on your pension tax-free to your heirs, without having to pay any inheritance tax. This should work into your budget and will help increase your retirement savings whatever changes are made in future Autumn and Spring statements.
Use Investment Services
Using expert advice from Bestinvest and other services to help tailor your pensions plan is a great idea. Guides and advice can be used to create a personalised plan, ensuring you have enough savings and can overcome any challenges that new financial policies may put into place. It may cost to enlist the services of experts but this can be easily recouped in the increased savings you will make for your pension.
Prepare for Future Changes
Always be ready for any more changes that the government may introduce to pensions and savings. Especially with Brexit negotiations about to get underway, there is a lot of uncertainty surrounding the UK’s future, which may impact upon the pensions sector.
Be prepared to make changes in the coming years to ensure your pensions plan remains solid and will lead to a happy retirement.