Pensions : Maximising your benefits

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested. 

Tax treatment varies according to individual circumstances and is subject to change.

For high earners, there are plenty of opportunities to fund pensions, despite the current Lifetime Allowance of £1,073,100 (as of the 2022/23 tax year).

Pension Opportunities

  • Pensions remain a highly effective and tax efficient method of retirement planning, but it is a complex area, with a myriad of pitfalls and upsides. Rumours of the removal of higher rate tax relief have increased over the last few years and each budget is met with nervous anticipation.
  • The Tapered Annual Allowance With effect from 6 April 2016, the annual allowance of £40,000 per annum was reduced for high earners. For the 2020/21 tax year, if you have total adjusted income in excess of £240,000 per annum, you will see your annual allowance reduced by £1 for each £2 this is exceeded, to a minimum of £4,000. This is a very complex area and so it is vital that appropriate advice is sought.
  • Carry Forward.  Despite increasing restrictions, you may be able to make a contribution in excess of the Annual Allowance of £40,000, or your reduced annual allowance, and still receive tax relief at up to 45% using Carry Forward. if you have contributed less than the Annual Allowance in the previous three tax years. This is a potentially complex area, with pension input periods and particularly Defined Benefit schemes are concerned driving a requirement for professional advice.
  • Lifetime Allowance. The reduction in the Lifetime Allowance to £1 million with effect from 6 April 2016, and only modest increases in line with inflation since then, mean that our clients are becoming increasingly affected. This means that advice is more important than ever to ensure that you are optimising your retirement planning, and are fully up to speed with the latest Lifetime Allowance protection opportunities.
  • Upon Death. For many a pension is the greatest liquid financial asset. Planning for what might happen upon your death is a vitally important part of your planning. Frankly the effect of a well thought through strategy can have enormous benefits to your beneficiaries.

Contact us today to discuss maximising your pension