THE SELF-EMPLOYMENT BOOM AMONGST WOMEN

THE VALUE OF PENSIONS AND THE INCOME THEY PRODUCE CAN FALL AS WELL AS RISE, YOU MAY GET BACK LESS THAN YOU INVEST.

TAX TREATMENT VARIES ACCORDING TO INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT TO CHANGE.

There has been a surge in self-employed women workers in the UK over recent years. According to figures from the Office for National Statistics. Women account for just under a third of all self-employed and they have made up over half (53%) of the increase in self-employment since 2008. Part-time self-employment has also grown rapidly amongst women. Many of whom choose to fit work around childcare responsibilities or caring for the needs of elderly parents.

However, just one in eight self-employed women contribute to a personal pension plan, meaning that many could find themselves struggling financially in retirement*.

Getting the pension saving habit

The government is said to be considering ways of extending auto-enrolment to the self-employed, but at present it’s up to the individual to put their own plans in place. If you’re self-employed, saving into a pension can be a more difficult habit to develop than it is for those in employment. Irregular income patterns can make regular saving difficult. However, there are plans available that can give you the flexibility you need, and the good news is that your contributions are topped up by income tax relief from HM Revenue & Customs.

How much should you aim to put aside to ensure you build up an adequate pension? The simple answer is probably as much as you can reasonably afford. If you were in an employer scheme, your employer might typically contribute 4% and you might be contributing a further 3% yourself.

So, it makes sense to discuss with your financial adviser the level of contributions you can make and the likely returns they would produce for you.

If you’re making plans for your retirement and would like some professional advice, then please get in touch.

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

*Prudential, Self-employment booms among women – but at what cost to their retirement plans? 2016

 

PENSIONS STILL A CLOSED BOOK TO MANY

In simple terms, a pension is a savings account that you pay into during your working life. So that you can withdraw money to spend during retirement. You can also receive tax relief on your contributions.

Simplified rules

Although pensions were simplified from April 2015. There are still rules, such as the amount you can typically pay in each year (£40,000 in many but not all cases). How much you can invest in total over your working life (generally £1m) and what happens to your fund if you die. (if that’s before age 75 you can leave it to someone tax-free, if you die after that age, there will be tax due).

Different types of schemes

There is of course the State Pension. The rules have changed, but you can get a forecast and confirmation of the date when you’ll receive it from the government.

Schemes run by employers

Then there are pensions operated by employers. These may be defined benefit schemes, often called final salary schemes. However, as these are expensive to run, many employers now offer defined contribution schemes, where what you will get depends on how the investments in the pension fund perform. Legislation now requires employers to offer most workers a scheme.

Personal Pensions

For individuals, people who are self-employed, contractors and freelancers there are personal pension plans. From April 2017, there will be a Lifetime ISA, not strictly a pension but offering a way to save until retirement. Many people confess to finding pensions too complicated, however, with some help and advice taking out a pension can be one of the best ways of securing a financially-comfortable retirement.

Tax treatment depends on individual circumstances. Tax treatment, rates and allowances are subject to change.

If you’re making plans for your retirement and would like some professional advice, then

please get in touch.

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

HOW TO PLAN YOUR RETIREMENT INCOME

Someone once said that preparing for retirement was as big a challenge as starting your first job, and in many ways, it can be.

In the early part of the last century, retirement was sadly often very short.

Thanks to increasing life expectancy, people retiring today could be looking at several decades.

That’s why more and more people are taking advice on how to plan their income. So that they don’t run out of money in their later years.

The changes in pension regulation that came into force in April 2015 mean that many individuals now have more flexibility at a younger age to use their pension savings in a way that suits them, and to have the type of retirement that they want.

One way to fund a potentially longer retirement is to put back the date at which it starts, and this is a path increasingly chosen by many people. This decision is often prompted by the increases in the age at which workers qualify for the State Pension; by 2020 it will be 66 for men and women and will rise to 68 by 2044.

Budgeting is key

It’s a good idea to take a critical look at your potential expenditure. Consider your goals and decide the amount you will need to make retirement a comfortable period of your life. Don’t forget to factor in unexpected expenses. Possible gifts of money to family members, the travel you’ve always wanted to do. Give some thought to putting aside some funds that could be used to provide nursing or residential care in the future.

Getting advice pays

Working with an adviser will help you see the bigger picture.

They will be able to take an objective view of your finances and can offer valuable advice on important issues. Such as how to use your pension pot to secure guaranteed income to cover your basic living costs. How to invest the remainder in a broad based portfolio to provide the level of income you’re looking for. They’ll ensure that you don’t expose funds you might need in the short to medium term to too much risk. But will consider your longer-term needs and consider factors such as the possible effects of inflation.

Retirement is a big step, so taking professional advice could be the soundest financial decision you’ll ever take.

If you’re making plans for your retirement and would like some professional advice, then please get in touch.

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

 

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