Investing money needs careful consideration and you need to be fully comfortable and sure of the risks involved. We can offer advice appropriate to your specific circumstances to guide you before making any decisions, here at Ensign we have an excellent reputation for giving investment advice to both existing and new clients, all of whom have been recommended to us.

Pensions

Our qualified pensions and investment advisers can help you plan for the future. We have a wide range of pension and investment options available no matter what your circumstances or level of wealth. Whether you are a first time investor looking to set up an ISA or a high net worth individual looking for discretionary fund management we can help.

A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

Start growing your pension pot today!

Call our friendly team on 01509 670000

Personal Pensions
Personal pensions may be suitable if you’re employed and not in a company pension scheme, or as an addition to a company pension. You may also wish to set up a personal pension if you are self-employed or if you are not working but can afford to put aside money for retirement.

You pay a regular amount (usually monthly or annually), or a lump sum to the pension provider who will invest it on your behalf.

Funds are usually run by financial organisations like building societies, banks, insurance companies, and unit trusts companies.

The final value of your pension fund will depend on how much you have contributed and how well the fund’s investments have performed. The companies that run these pensions charge you for starting up and running your pension. Charges are normally deducted from your fund in the form of fund management charges.

Contribution Levels and Tax Relief

The Annual Allowance for pension contributions is £40,000pa. This figure includes both employee and employer contributions.

Tax relief will continue to be at the individual’s marginal rate. This means that high-earning individuals will be able to receive up to 45% tax relief on their contributions.

You can carry forward unused contributions from the previous three years, potentially allowing contributions of up to £160,000 in a single year. HMRC has confirmed that you do not need to have made a contribution to a registered pension scheme in a year to be able to carry forward unused annual allowances – an individual must have been a member of a registered pensions scheme during the earlier tax year. The definition of a ‘member’ includes an active member, a pensioner member, a deferred member; or a pension credit member.

If you wish to carry forward unused annual allowance from previous tax years, you will need to have used up the annual allowance for the current year.

For each pound you contribute to your scheme, the pension provider claims tax back from the government at the basic rate of 20 per cent. In practice, this means that for every £80 you pay into your pension, you end up with £100 in your pension pot.

Higher-rate taxpayers
If you’re subject to the higher tax rate of 40 per cent (up to 45% with additional rate tax), you’ll still get 40 per cent tax relief for any money you put into your pension. But the way that the money is given back to you is different:

  • The first 20 per cent is claimed back from HMRC by your pension scheme in the same way as for a lower rate taxpayer.
  • It’s up to you to claim back the other 20 per cent if you’re a higher rate tax payer or 25 per cent if you’re an additional rate tax paper when you fill in your annual tax return, or by contacting your Tax Office.
  • If you don’t pay tax, the most you can pay in with tax relief is £2,880 a year. But you’ll still get basic rate (20%) tax relief, meaning the government will ‘top up’ your contribution so that £3,600 is invested.
  • Your pension fund will invest the money you save (including the tax relief amount) in your pension. Your pension fund growth may be free of tax.
  • Any rise in the value of the scheme’s assets between what you put in, and what they’re worth at the end, is called ‘capital gains’. This is tax-free.
Drawing your Personal Pension

You can take a pension commencement lump sum of up to 25% of the value of your pension savings, which is currently tax free, when you retire (up to a maximum of 25% of the lifetime allowance). The lifetime allowance currently is £1.03 million.

You then have two main options:

  • Use the rest of the fund you have built up to buy an annuity (a regular income payable for life) from a life insurance company. This does not have to be the same company that you have your pension plan with.
  • Take an income (taxed at your normal Income Tax rate) from the remainder of your fund while it remains invested.

It should also be remembered that under the new pension flexibility rules, one off lump sums may be available to be taken from the pension plan from age 55 onwards. These lump sums will be available subject to the scheme rules allowing, and there will be taxation issues to consider if income is taken.

Putting money into someone else's personal pension
You can put money into someone else’s personal pension (eg. your spouse/partner, child etc). They will get tax relief added at the basic rate, but this won’t affect your own tax bill. If they have no income, you can pay in up to £2,880 a year (which becomes £3,600 with tax relief).

For example, if you put £80 into a spouse or civil partner’s pension scheme, the government would put in £20, so their pension pot would increase to £100. Your tax would remain the same.

The tax treatment is dependent on individual circumstances and may be subject to change in future.

If you need help with deciding how to invest your contributions, please contact us here at Ensign Mortgages & Investments on 01509 670000 or email gary@ensign-fs.co.uk

Pension Transfer
Your pension is your income for retirement, and you should feel like you’re in control of it. If you’ve had several different jobs (and people now have an average of 11 during their careers) then you probably have several different pension pots. Most pension providers still have a habit of sending hefty paperwork that’s full of small print, jargon and hidden fees that reduce the value of your pension over time. This makes it pretty tricky to keep track of your retirement savings and plan for the future.

Ensign will advise you so you can easily transfer and manage your pension and get on top of your retirement planning. Subject to being in your best interest and obtaining approval, you can consolidate small pension pots together, making it easier to map your projected retirement income.

Ensign advisors are on hand to help you with anything you need, and our pension calculator can tell you whether you’re on track to meet your retirement goal. Here at Ensign we can make managing your pension easier.

Pension Sharing
Pension sharing applies to all pensions, apart from the state basic old age pension.

All pension benefits are valued (see CETV below). The share can be granted by way of a transfer to the petitioner’s own scheme, or the petitioner may become a ‘paid up’ member of the respondent’s company pension scheme.

This latter option is rarely used, as the retaining scheme will not wish to have the increased costs, disclosure requirements and administrative inconvenience associated with additional members (non-employees).

The rules allow schemes to insist on ‘buying out’ the spouse’s benefits, if the scheme considers it appropriate. Most schemes insist on this route. The exception is usually the government and Local Authority schemes, which are ‘pay as you go’ and therefore reluctant to pay large transfer values.

Pensions that are already in payment (eg. through an annuity) can be ‘unbought’, split and ‘rebought’ using the annuity rates for the member and petitioner at date of divorce. Indeed, if the petitioner is much younger, they can use the lump sum as a pension contribution (or many other alternatives).

The biggest problem with pension sharing is the cost. Schemes are entitled to charge for the calculations and administration involved in splitting the benefits. The recipient must also consider the cost of any required financial advice, which may make the entire process uneconomical.

At present, little consideration has been given to “co-habitant” relationships, although it is the subject of significant lobbying.

Inheritance Tax Planning

All assets, including your home, personal possessions and savings, may be subject to inheritance tax (IHT) over and above the prevailing nil rate band. Sound planning, based on a comprehensive review of your assets and liabilities, may help reduce your IHT liability, safeguarding your beneficiaries’ long-term security.

The Financial Conduct Authority does not regulate advice on Estate Planning or Inheritance Tax Planning.

The individual Inheritance Tax threshold remains at £325,000, each person has an additional family home allowance of £125,000, which is relevant where their main residence forms part of the estate. In such circumstances, individuals can now pass on assets – which include the family home – to their children or grandchildren worth up to £450,000, with no Inheritance tax liability.

Certain lifetime gifts can be made without giving rise to an inheritance tax charge. For each tax year the annual gift exemption is £3,000 and it is worth considering making a gift of this amount if you are in a position to do so.

In addition, if you did not make use of any part of the £3,000 annual gift exemption to which you were entitled for the current tax year, then this can be utilised before 5th April.

Please note that any unused allowance for the earlier tax year must be used before the current year’s allowance. It can only be carried forward for one year and then, if unused, it is lost.

Unlimited gifts can also be made in the form of Potentially Exempt Transfers (PETs). Provided you live for 7 years after making the gift, it will be free of inheritance tax.

Please ensure that, should a gift be made by cheque, sufficient time is given for the cheque to clear before 5th April; otherwise it will not be included in the current year’s total.

Gifts of £250 can be made to any number of separate individuals without giving rise to an inheritance tax charge. Gifts of varying amounts can also be made between family members on the occasion of a wedding/civil partnership ceremony, without any inheritance tax liability.

Tax advice which contains no investment element is not regulated by the Financial Conduct Authority.

Information regarding taxation levels and basis of reliefs are dependent on current legislation and individual circumstances, are not guaranteed and may be subject to change.

ISA’s

For more information please contact Ensign Mortgages & Investments Ltd on 01509 670000 or email enquiries@ensign-fs.co.uk and we will be happy to assist you.

Ensign Mortgages & Investments

14 Market Place

Kegworth

Derbyshire

DE74 2EE

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