How your future looks will ultimately be determined by having the right vehicle in place for your retirement. As you approach retirement and start thinking about when and how to take your money, it’s a good idea to check what pensions you have and what they might give you. The rules around pensions are continuously changing, which means it’s essential to receive regular professional advice on how to build up and invest your pension effectively.
When it comes to managing money, one of the things some people find most difficult to understand is the tax relief they receive on payments into their pension. Tax relief means some of your money that would have gone to the Government as tax goes into your pension instead. You can put as much as you want into your pension, but there are annual and lifetime limits on how much tax relief you get on your pension contributions.
New changeover arrangements designed to be simpler than the old system
The State Pension changed on 6 April 2016. If you reached State Pension age on or after that date, you’ll get the new State Pension under the new rules. The new State Pension is designed to be simpler than the old system, but there are some changeover arrangements which you need to know about if you’ve already made contributions under the old system.
Building up a pot of money to provide an income in retirement
With a defined contribution pension, you build up a pot of money that you can then use to provide an income in retirement. Unlike defined benefit schemes, which promise a specific income, the income you might get from a defined contribution scheme depends on factors including the amount you pay in, the fund’s investment performance and the choices you make at retirement.