The new ISA addition was designed to help younger people save for both a house and their retirement.

So for anyone between the ages of 18-to-40, you can basically save up to £4,000 a year and receive a government bonus of 25%, up to £1,000 a year, until age 50. This means that for every £4 saved, the government gives you £1. Great news!

The money can be accessed tax-free to either buy a property worth up to £450,000, or at age 60 for retirement. If the money is accessed before age 60 and not used to buy a home the government bonus will be removed and a 5% charge will be levied.

Lifetime ISAs are being heralded as an alternative to saving into a pension but of course pensions still remain available and dedicated savers can save into both if they wish, receiving the tax relief on their pension contributions which they would have done previously.

If you save your money into a lifetime ISA until age 60, up to the limits allowed, and then transfer the fund into a pension, you will get the top-up into the lifetime ISA, and the 25% tax-free lump sum available through the pension.

The ISA fund transferred into a pension would then receive tax relief at your highest marginal rate of 20%, 40% or 45%.

You can then access the pension fund including the tax relief – with the first 25% taken from the fund being a tax-free lump sum.

Investors are currently able to save £40,000 Gross each year into a pension, known as the annual allowance. They can also utilise any unused allowance from the previous three years, known as ‘carry-forward’

However ‘money recycling rules’, stop you from making large pension contributions, getting tax relief, and then taking out the 25% tax-free cash right away.

Please bear in mind the tax relief available to savers could change in the future, and also the annual allowance contribution level could change.

For bespoke advice on your Pension’s and Investment’s contact Credencis.

We are situated between Derby and Nottingham, but visit clients nationwide.

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From 6 April 2016, the annual allowance will be tapered from £40,000 for those with earnings of £150,000 or more down to £10,000 for those with income of £210,000 or more.

Income will no longer just be comprised of someone’s salary. It will be “adjusted” to include employer pension contributions or any other income, including savings, bonuses or even buy to let property rental – taking many more people into a higher earnings bracket. The annual allowance will reduce by £1 for each £2 of adjusted earnings above £150,000 until it reaches £10,000.

If employees earning £150,000 or more don’t reduce their pension contributions from 6 April,
they will be taxed at 45% on any excess and face a surprise tax bill.

If people act now, they can reduce the possibility of their tax liability. They can either carry forward any leftover pension allowance from previous years or take advantage of the transitional pension input period (PIP) which will provide the opportunity of making a total payment of up to £80,000 into their pension pot this year.

The lifetime allowance is also reducing from £1.25m to £1m. After April 2016, anyone who breaks through the £1m threshold may be liable to 55% tax on any amount over the limit, if the excess is taken as a lump sum. If any of the excess is instead taken as income, the tax charge is 25%, although the income itself will still be subject to income tax at the recipient’s marginal rate.

Taking into account an annual growth rate of 5%, any individual with a fund currently worth £358,000 with 20 years to go until retirement is likely to hit the £1m ceiling. An unintended consequence is that most “death in service” benefits paid out will also count toward the £1m.

Source: Pensions World

For bespoke pension advice contact Credencis.

We are situated between Derby and Nottingham and visit clients nationwide.

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One of the big benefits of pensions has always been the tax free cash lump sum you can take when you retire. In general you can take up to a quarter (25%) of your pension pot tax free and until recently, you would have expected to start taking an income with the rest of your money at the same time.

The government has now changed the rules, you can still have the tax free cash lump sum but you no longer need to start taking an income with the remainder, you can just leave it to use at a later date. You still need to be at least 55 years of age but you don’t need to have retired from work.

What do we do

One of our qualified advisers will work through a series of questions with you to better understand your needs and objectives and after reviewing all the options will make a personalised recommendation.

What could you do with the tax free lump sum?

For many people, a tax free cash lump sum offers a great opportunity to help put their financial affairs in order.

Most common uses are typically:

• Help pay off a mortgage or other debts, such as credit cards and loans
• Paying for a holiday, a new car or just making life a little easier
• Help the children with a loan or to get them on the housing ladder
• Investing the lump sum to generate more income

For bespoke pension drawdown advice on releasing money from your pension fund contact Credencis.

We are situated between Derby and Nottingham, and visit clients nationwide.

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A full state pension from April 2016 will pay £155.65 a week. That is based on you having made a maximum 35 years of qualifying National Insurance contributions.

Only people living in Chile and Mexico live on less in retirement.

If you have saved for your retirement into a personal pension the report says you will retire on 67% of your former salary.

If you are relying on the state pension your retirement could be bleak.

To find out how much you need to start paying into a private pension please visit our calculator.

Source: OECD

For bespoke pension advice on your retirement contact Credencis.

We are situated between Derby and Nottingham and visit clients nationwide.

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This allows members of defined contribution (DC) schemes to access their entire pension pot from the age of 55 without incurring heavy tax penalties. Up to 25 per cent can be taken tax-free and the remainder is now taxed at the saver’s marginal rate.

The pension income provided by DC schemes is variable, being based on factors such as the amount paid in, charges and investment performance. DB schemes, in contrast, pay a guaranteed pension income based on earnings and length of service.

The problem is that while DB scheme members are often attracted to the flexibility offered in the new environment, many fail to appreciate the value of their guaranteed arrangements.

The number of people cashing in their DB pensions was on the rise even before the reforms, as employers sought to reduce their pension costs by offering members cash incentives to transfer out.

Usually the critical yield, the return that the alternative arrangement must achieve year-on-year just to match the DB pension, potentially could be high.

The current cash equivalent of the transfer value, providing a detailed breakdown of the calculations, is also important. This is where interest rate expectations might come into play.

The current cash value can fluctuate significantly and right now, due to low gilt yields, there are increasing inquiries about a potential window of opportunity to act before interest rates increase and currently high transfer values are likely to fall.

There are plenty more factors to consider, including objectives, other assets and income, and the individual’s health and family history.

There are some scenarios in which transferring out might be the best course of action. They include cases where health issues may curtail the individual’s retirement, or where there’s no-one to inherit the pension at death.

“I would advise most DB members to stay put and benefit from a guaranteed income in retirement that they’d be unlikely to get from any other arrangement”

“The thought of being able to turn an income stream into a large capital sum can often appear attractive at first glance, but you have to think about the returns and the risk associated with the alternative arrangement”

For bespoke final salary pension transfer advice contact Credencis.

We are situated between Derby and Nottingham, and visit clients nationwide.

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Research from Brewin Dolphin show that for a target net pension of £20,000 at age 68 – excluding the state pension currently set at £115.95 per week for a single person – 25-year-olds would need to find £790 per month, including their employer’s contribution.

However if the employee waited until they were 35, the monthly payments would be £1,145, and ten years later it would cost £685 more per month.

Starting a pension savings plan may not be top of your priorities, but you may be surprised how much of a difference starting earlier could make to your future – and you should consider the risks of delaying your pension contributions.

Please use our Pension Calculator to get an estimate of what contributions you need to pay to achieve your goal in retirement.

Source: Brewin Dolphin

For bespoke pension advice contact Credencis.

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An individual’s state pension is based on their National Insurance record.

Under the current system the all-important figure is 30 years of qualifying National Insurance contributions. That gets you the full basic state pension of £115.95 per week.

That will rise with the new flat rate regime to 35, which will get you the new pension of no less than £151.25.

This means you need to have had 35 years of working and paying Nics (as National Insurance contributions are known, to get the flat rate pension from April 2016.

Both allow you to purchase extra credits if you don’t have enough working years to ensure you get the maximum amount you are entitled to.

But you can also earn extra benefits, such as the state second pension, which boosts your payout depending on how long you have worked for, and pension credit, which tops up your income if below a certain threshold.

If you have had periods out of work then you may not have a full 30 years of National Insurance contributions.

This is something that has affected many women, who took time out of work to raise children. You can buy extra credits to make up the shortfall.

There will be no more pension credit or second state pension from April 2016.

Those with fewer than 35 qualifying years but above the minimum qualifying period of 10 years, will get a proportionally smaller amount.

For example, someone with 25 years would get 25/35th of the full single-tier pension.

You could use the state pension calculator to see what you are entitled to or if you are within 30 days of your state pension age you could contact the Pension Service to get a statement of what you are entitled to.

As with the current system, you will be able to buy extra credits by completing form N138- these add years onto your NI record up to state pension age. These are known as Class 3 contributions and cost £14.10 for each week.

The weekly cost is £14.10 in the 2015/16 tax year, or £733.20 a year for each complete year that you buy.

The cost can change each year and you have up to six years from the date you become eligible for the state pension to apply for extra credits.

Buying an extra year currently costs £733.20, this is likely to change.

An explanation on the Government’s Gov.uk website explains: ‘You may be able to get more State Pension by adding more qualifying years on your National Insurance record after 5 April 2016 (until you reach the full new State Pension amount or reach State Pension age – whichever is first).

‘Each qualifying year on your National Insurance record after 5 April 2016 will add about £4.32 a week (which is £151.25 divided by 35) to your new State Pension.’

Each extra year would be worth about £225 a year in pension income.

One thing that is important to consider when buying extra years of pension is that the state pension is linked to inflation and should rise each year. At the moment it benefits from the Triple-lock, which means it will go up by the higher or the rise in average earnings, inflation, or 2.5 per cent.

What if you retire before the new pension arrives?

The Government has set up a system where from 12 October 2015 to 5 April 2017 you’ll be able to make a ‘Class 3A voluntary contribution’ to top up your state pension by between £1 and £25 per week.

This will enable those with the current basic state pension to add extra income that willput them closer to the new flat rate pension.

This option only applies to men born before 6 April 1951, currently aged 64-plus, and women born before 6 April 1953, currently aged 62-plus.

The cost of topping up varies on both how much extra pension you wish to buy and your age – the older you are the cheaper it gets, as you are less likely to draw that higher pension for longer.

The Government gives the example of a 68-year-old in October 2015 who would pay £827 a year for every £1 extra of pension they wanted to buy.

To buy an extra £5 per week, or £260 per year, would cost them £4,135.

Source Gov.uk

For advice on your state pension contact Credencis.

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