Planning Your Retirement? Useful Information and FAQs

If there’s one thing everyone looks forward to during his or her later working life, it’s having enough money to retire. Maybe you’re planning to travel the world? Perhaps you’ve set your sights on racing rally cars or settling down by the seaside? 

Whatever your plans, its important to get a clear idea on the retirement process before jumping into things head first. You may think that retirement is as easy as waking up one morning to find your bank account balance bolstered by your latest pension payment – if only it was that simple!

Retirement can be a bit of a grey area, the guidelines aren’t always clear. To help, we’ve compiled a guide with everything you need to know about the next big step. We’ve also included those all-important answers to the questions that regularly crop up around the subject, everything from “how will new workplace pension laws affect me?” to “when will I receive a state pension?

Retirement Age

You may be surprised to know that there is no formal retirement age. Previously UK citizens would retire by default aged 65. 
Nowadays you can go on working for as long as you please, whilst still claiming a state pension. When you receive this will depend on your qualifying state pension age…

State Pension Age

Not to be confused with retirement age. State pension age is the date in which you can start receiving a ‘state pension’ i.e. where your national insurance payments have been going all these years. There’s no set age as to when you can start claiming this. The dates differ for different people; depending on birthdate and a number of other factors. The best way to work this out is by using a state pension calculator, which can be found here on the GOV.UK website. However, if you’re aged 55 or over, its strongly advised that you fill out a statement. This can also be found on the government site. 

Workplace Pensions

This is where things get a little more confusing. In 2012, government legislation was introduced to ensure all employers offer a workplace pension. In short, when you pay a sum into your pension, your employer pays into it too - this is taken as a percentage cut of your wages.
All employees will automatically enrol onto the scheme, providing you’re over 22, under the state pension age and earning a minimum of £10,000 a year. If you already have an arrangement in place and do not think you’ll benefit from the workplace pension, you can opt out at any time. 

How is my ‘investment’ invested?

There are several options for those looking to invest in a workplace pension, from low-risk policies to high-risk policies and ethical funds. 
This is where things get a little complicated. It’s worth speaking to an independent financial adviser if you’ve little to no experience in investing. 

I won’t be needing the workplace pension

If the workplace pension scheme doesn’t affect you, or if you’re planning to opt out, there are other ways you can invest your future savings.  SSAS (small-self administered schemes) and SIPP (self-invested personal pension) policies are just two of the many investments available to you. These schemes often help those who are looking to invest their money through alternative means, such as a business premises. Again it’s always worth checking with an IFA before making any quick decisions. 

How can I access my pension?

New legislation was introduced in April 2015 to allow those with a contributed pension to take a lump sum or small amounts at the age of 55. It’s worth noting that 25% of the money you withdraw will be tax-free; the rest will be subject to tax. Think of it as an income tax. 
As with most retirement related queries, it may be worth seeking advice from an IFA, who will be able to help you reclaim your funds. 
This is especially true if you’ve had several jobs and have paid into several pension pots over the years.

What can I spend my pension on?

Whatever you like! Many choose to use their fund to travel, living costs, paying off their mortgage or to fulfil lifelong dreams. 

There are no set guidelines regarding how you use your pension. At the end of the day, you’re entitled to any investments you may during your working life! For more information or for details on how to get in touch with one of our helpful IFA’s, visit our information page on retireme