The Accumulation Phase

When building sufficient funds during the Accumulation Phase you need to have a target retirement date in mind. We can help you to establish how much income you are likely to actually need and compare this to the sources of income you will have at that time, such as the State Pension, other pensions, investment income or rental income. Remember that not all of these sources of income may be available to you when you intend to retire. To receive a State Pension forecast click on the following link on the Pensions Service website:

www.thepensionservice.gov.uk/state-pension/forecast/home.asp

The earliest you can usually take non-State Pension benefits is age 55 and therefore the decision as to how much to pay into your pension needs to be balanced between what you can reasonably afford to contribute now (as it could be many years before you can access your pension fund) and contributing enough to give you a good chance of achieving your objectives.

Also, the Government currently have a system of Means-Tested State Benefits (Pension Credits) which are designed to provide you with a minimum level of income at State Pension age. Therefore very low-earners or people with limited ability to accumulate pension funds need to be aware of the affect that making pension provision could have on these benefits, as any income you receive (such as pension income) could affect your eligibility. Further information can be found at www.direct.gov.uk, in the ‘Money, Tax & Benefits’ section.

Another key decision is how to invest your funds. This will be dictated by your attitude to investment risk, timescale, the investment options available within your pension contract and possibly the growth rate necessary reach your target fund. We conduct regular reviews with you to ensure your plans remain on track and to take into account any changes to your circumstances, investment conditions, legislation or other factors such as your pension provider’s commitment to the pensions market.

For example, we regularly advise people regarding old pension plans they have that are no longer suitable in meeting their objectives, perhaps because the contract charges are high, the investment options are limited, because they are invested into With Profit funds that no longer pay any regular bonuses, or simply that legislative changes have meant there are more appropriate pension contracts now available. However, it is important to understand the potential disadvantages of changing pension provider and we will provide you with sufficient information in this regard to enable you to make an informed decision.

 

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