Retirement news

Get the best from your retirement

6 November, 2006

HSBC’s ‘The Future of Retirement: What the world wants’ research found that, in the UK, over half had never sought retirement planning information and nearly three quarters of people had never saved money for later life.

Ian Martin, Head of Pensions and Retirement Income, HSBC Bank, said: “It’s easy to be confused by the vast array of complicated information available concerning pensions and retirement.

“It is vital that individuals understand the importance of adequate retirement planning and receive the correct advice when making decisions that will affect both their own and their family’s future. No matter what their age, people should act now and our tips are a great way to start.”

Maximise your Personal Pension Pot

• Following A day on the 6th April, you can now gain tax relief on up to 100 per cent of your earnings or £215,000, whichever is lower (2006/7 tax year).

• You can also make a lump sum contribution using any of your savings.

• This means even if you have not made enough pension contributions to date, you have the opportunity to significantly increase your fund.

Maximise your Retirement Income

• Research from the Association of British Insurers and The Annuity Bureau suggests that 60 per cent of customers would do better if they searched the open market for their annuity rather than staying with their existing provider.

• The difference between annuities could be worth as much as 25 per cent of your income each year of your retirement. Despite this, many people do not plan or take advice on their annuity purchase and so lose money.

• Make sure you search for the best option and gain independent advice to maximise your retirement income.

• For some, releasing cash locked up in their home via an equity release loan can help fund their retirement needs. An equity release loan still gives you the right to live in your own home and enables you to leave an inheritance for your family.

Keep your Private Medical Insurance costs down

• If you receive private medical insurance as a company benefit, you need to speak to the insurer prior to retiring so that you can continue your contributions.

• If you break your contributions, your payments will be re-assessed and you are likely to have to pay more due to your age, or reduce your level of cover.

Maximise Share Options

• You may have to exercise any company share options before or soon after you retire.

• You need to check the options carefully otherwise you could risk losing some or all of your options.

Take all of your Benefits

• Winter fuel payments of £200 are payable to most people aged 60 and over (£300 for those over 80).

• Prescriptions and sight tests are also free to people aged over 60.

• Nearly half of all pensioners are entitled to Pension Credit but many people are not claiming.

• Those receiving the ‘guarantee’ part of pension credit can also receive help with their council tax and housing benefit.

Maximise your State Pension

• If you have had breaks from employment you need to obtain a state pension projection from the Department for Work and Pensions to check whether you are going to receive the full basic state pension.

• It costs from as little as around £7 a week to buy back your full entitlement and for the vast majority of people (except those on very low incomes) it is a very good deal.

• Men need to have made NI contributions for 44 years and women 39 years to receive the full pension of £84.25 per week. After 2010, it is expected that the number of qualifying years will be reduced to 30 years.

Ensure you can provide the help and care needed by your family

• Consider setting up an enduring power of attorney if you have an elderly relative who could suffer any form of mental incapacity at some point in the future.

• Many people assume that when their parents or partners become mentally incapacitated that they will be able to act on their behalf. This is not the case, and without an enduring power of attorney you are likely to have to go through the Court of Protection which can be both upsetting and time consuming.

• Remember you cannot set up an enduring power of attorney after the individual concerned becomes mentally incapacitated.

Maximise what you leave to your family

• Two thirds of people in England and Wales never make a Will as they wrongly assume that their partners will automatically inherit everything which is not always the case.

• With the increase in property prices many estates are now above the inheritance tax threshold of £285,000 – and anything above this limit is taxed at 40 per cent.

• By taking advice on how to structure a Will you can significantly reduce the amount of inheritance tax paid.