Latest news with #IanCook
Telegraph
12 hours ago
- Business
- Telegraph
Self-employed? How to set yourself up with the same benefits as employees
Being your own boss comes with many perks, but the significant downside is that self-employed workers don't have access to the valuable package of benefits that come with being an employee. Staff benefits can include a workplace pension, as well as life insurance, income protection and private medical cover, as well as smaller perks that give you access to wellness packages and discounts for gyms and even groceries. Going solo means you'll either have to miss out on these or foot the bill yourself. However, there are ways you can plug the gap. Here's what sole traders should be doing to access the work benefits they need – without breaking the bank. This guide covers: Pensions Life cover Private medical cover Wellbeing Savings buffer and income protection Perks of an accountant Pensions The self-employed have a reputation for lacking in pension provision. Almost 40pc of self-employed people don't pay into a scheme, according to Interactive Investor. Worse still, 38pc have no pension savings at all, rising to 50pc among under 35s. Ian Cook, an adviser from Quilter Cheviot, said: 'Pensions are complicated and so the easy thing to do is ignore them. But it's important to take control of your own future and start contributing to a pension.'
Yahoo
06-06-2025
- Business
- Yahoo
How much do you need to retire?
The idea of finally retiring from work may fill some with joy – but it can also be a great source of anxiety. It is all well and good to dream of long summers, holiday homes and big family trips, but how much money do you need to fund a new life without a salary? Ian Cook, of the wealth manager Quilter, said: 'In days gone by, defined benefit pensions meant that people typically didn't need to worry about their pension income running out because they got a guaranteed income for life. 'Now, in the world of defined contribution schemes, you need to carefully balance how much you want to have for your retirement and how long you want it to last for.' Below, Telegraph Money explains how you can fund a comfortable retirement, and why options like early retirement and the cost of care might mean you'll need to set more aside. What is a comfortable retirement income in the UK? How to increase your retirement pot Can you afford to retire early? Do your savings need a bigger boost? Comfortable retirement FAQs A 'comfortable' retirement, according to the Pension and Lifetime Savings Association (PLSA), includes having the budget to stretch to luxuries such as kitchen and bathroom replacements every 10-15 years, regular beauty treatments, theatre trips and two weeks' four-star holiday in Europe every year, with budget to take others out for a meal every month. This, according to the research, is expected to cost around £60,600 for a two-person household, or £43,900 for a single person. A 'moderate' retirement, meanwhile, refers to a lifestyle where you can afford a few luxuries, including being able to take a three-star two-week holiday in Europe and a long weekend in the UK each year, run a small second-hand car to be replaced every seven years, and buy occasional treats for yourself. For someone on their own, this would require £31,700 a year, whereas it would cost £43,900 for a two-person household. On a minimum income, however, PLSA estimates that you cannot afford a car, and your only holiday would be for a week in the UK, with smaller budgets for food, clothes and gifts. Costs come in at £13,400 for a single person, and £21,600 for two people. The table below shows how much pension income experts think someone living alone would need each year, depending on your lifestyle. These figures may not sound too far out of reach, but building up a pot big enough to consistently pay out these sums each year is not easy – especially as the overall value of your pension will fluctuate depending on moves in the stock and bond markets. To help fund the retirement you seek, you should consider taking the following steps, which include plans for both your state and private pension: Check your state pension forecast – you can do this on Fill in gaps in your National Insurance record Increase pension contributions Maximise employer contributions to your workplace pension Consider opening a Sipp Make lump sum contributions Invest wisely Make the most of available tax relief Cut unnecessary expenditure by budgeting Use the full Isa allowance. The first thing to do is to check your state pension forecast, as these government payments will act as a helpful building block for your retirement income. You will qualify for the full state pension if you have 35 years of National Insurance contributions. This will vary according to your career history – for example, if you have ever worked abroad, your NICs record may be lower – so it is always best to check beforehand. You can view your official state pension forecast via the government website. If there are gaps in your National Insurance record, then you can pay voluntary contributions or claim NI credits to help boost your state pension payments. You can pay voluntary contributions for the previous six tax years, and the deadline is April 5 each year. The state pension age is currently 66, although it is in the process of rising to 67 by 2028, and is legislated to rise again in the mid 2040s to 68. If you want to retire before this age, then you will need a much bigger private or workplace pension to help you do so. This depends on your circumstances, such as your pensions, savings, whether you have any debts and what you want your retirement to be like. You can technically choose to 'retire' and stop working at any age if you can afford it, but if you're planning to live off your pension savings the earliest age at which most people can access their private pension pot is set at 55. This is meant to stay at around 10 years lower than the state pension age, and is due to increase to 57 in April 2028. Our step-by-step guide to retiring early can help you prepare. As mentioned above, this depends on the kind of lifestyle you want to maintain throughout your retirement. To retire at 55 and have a comfortable lifestyle, you'd need to buy an inflation linked annuity for £1,073,115, according to calculations by Quilter, rising to £1,590,457 for a joint annuity with a 50pc spouse benefit. The tables below show how retirement age affects the required size of inflation-linked annuity. The quotes are RPI-linked, and the amount you would need to have in the pot to buy the requisite income based on the 2025-26 PLSA values. Waiting for your state pension payments can alleviate some of the pressure. If you kept working until the current state pension age of 66, then you'd need to buy an individual annuity of £834,314 to fund a comfortable retirement. There are several scenarios to consider that may indicate a need to boost your pension pot, including: Marriage or divorce Economic instability Unexpected health issues History of familial longevity Tax changes. Some people plan for retirement under the assumption that they will need less money as they age, because they will go out less and will have paid off any leftover debts – but this may not be true if you need help with care, Quilter's Ian Cook added. The 'healthy' life expectancies of men and women are 63 and 64 years respectively, so you could feasibly need two decade's worth of help if you live into your eighties. Given all these cost pressures, your pension pot may look leaner than you would like. If this is the case, the key is not to panic as there are still lots of ways that you can help your nest egg grow, especially as the cap on lifetime pension savings is in the process of being dismantled. The lifetime allowance has been abolished. When it was in place, it capped the amount you were able to save – most recently at £1,073,100. If you exceeded this amount, you were subject to tax at a maximum of 55pc. Mr Cook said: 'During your lifetime you may have increases in your salary, big bonuses or a windfall from an inheritance or elsewhere. Whenever this happens, think about your pension.' The annual allowance caps how much you can pay into your pension tax-free each year. It is set at £60,000, but tapers down for higher earners. For people who have already retired and are considering a return to work, a different rule applies when paying into their pension – payments are subject to the 'money purchase annual allowance' which is set at the lower level of £10,000. According to the latest figures from the Department for Work and Pensions, the average single pensioner has an income of £13,884 a year. For couples, that jumps to £29,172 between them. This is after housing costs. See our guide to the average pension pot for more information. This is difficult to know with any certainty, as no one really knows how long they are going to live. You can make a plan based on the average life expectancy in the UK, which is 78.6 for men and 82.6 for women, according to the latest government figures. If you were to take your pension at 55, then you would need it to last on average for around 25 years. Escaping British weather for sunnier climes is a popular option, but there are extra factors to consider when retiring abroad, which could mean needing an even larger pot. You are likely to need a visa and evidence that you can support yourself if retiring abroad in popular European Union countries, with each member state having its own minimum income requirements. British pensioners also have to be careful when retiring to France or taking their pension in Spain as the 25pc tax-free withdrawals rule does not apply if accessing the funds while living in these countries. France and Spain also have a wealth tax, which could reduce your income. In contrast, retiring in Portugal may be more attractive to people with larger pension pots, as there is no wealth tax – plus the country charges just 20pc tax on pension income from abroad. No one can predict how much bills will rise and the impact that inflation or interest rates will have on your income wherever you retire. So working out how much you will need to fund your golden years is a complicated question, but perhaps the simple answer is – as much as possible. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Guardian
22-03-2025
- Business
- The Guardian
Splashing the cash: how wealthy retirees are avoiding ‘inheritance tax raid'
Financial companies are reporting a 'huge' increase in well-off older people withdrawing sizeable sums from their pensions to splash out on family holidays and give to their children. This wave of spending and gifting has been triggered by the chancellor Rachel Reeves's decision to launch what some have called an 'inheritance tax raid' on unspent pension money – thereby lobbing a grenade into many older people's financial planning, say critics. Many well-off older people would have been planning to leave unspent pension savings to their children or grandchildren but the shake-up announced in last October's budget, which is due to take effect from April 2027, means this money could be liable for inheritance tax (IHT). As a result, large numbers of people are taking action now to avoid being landed with a bill that, for some, could run into six figures. 'Many of my clients have opted to adjust their financial plans to make the most of their money now and ensure no more than is necessary ends up in the hands of the taxman,' says Ian Cook, a chartered financial planner at the investment firm Quilter Cheviot. Daniel Hough at the financial planner RBC Brewin Dolphin says he and his colleagues have seen a 'tremendous increase' in the number of withdrawals from pensions and other products such as Isas for the purpose of spending the money or gifting it. For example, more people with grandchildren are splashing out on multigenerational family holidays. Hough says one of his older client recently decided to withdraw a chunk of pension money and spend about £55,000 on treating the family – seven adults and four children in all – to an 'unforgettable' three-week holiday to Florida next year. Meanwhile, some clients are using this as an opportunity to 'go five-star rather than four-star' with their trips or upgrade to business class flights. Asked about older people aiming to spend their pension cash, Philip Dragoumis, the director and owner at Thera Wealth Management, gives the example of a 'wealthy widow' in her 60s with a daughter in her 20s 'who is planning to take lots more expensive trips abroad now with her daughter than before'. He adds that trying to make his client 'spend more money has been my mission anyway this past year … A looming 40% tax on her pension when she dies is now the motivation she needs.' Anick Sharma, a financial planner at Videre Financial Planning, says he has seen lots of examples of older people shifting their focus to prioritise spending after October's announcement. 'One individual took his entire family (including grandchildren) to an amazing villa in Thailand for a month. Having caught up with him after, the takeaway was that you couldn't put a price on those memories,' says Sharma. Likewise, Cook says several of his clients have 'bitten the bullet' and opted to pay to take their families on holiday. One has booked a trip to France for them and their family, as well as a cruise, he adds. 'Others are gifting their family members money to book their own holidays.' Cook says some clients are opting to give their children money towards a first home. One had loaned their child some money for a deposit but, because ofthe budget announcement, has decided to give this cash as a 'potentially exempt transfer' instead, and plans to do the same with their other child, too. Another has opted to use some of their pension tax-free cash to give a lump sum to their children to help them with home improvements. Meanwhile, Gary Smith, a senior client partner at Evelyn Partners, was recently introduced to a widower in his early 80s who has a £900,000 Sipp (self-invested personal pension) that he wants to leave to his two sons. The man is worried about the IHT payable on his death after April 2027, so he wants 'to reduce the pension as quickly as possible' and is going to immediately start giving chunks of cash to each son. 'That's not something I've recommended he does – he has chosen to do that,' Smith says. Hough says the increase in withdrawals 'has pushed up our workload', and that there are 'widespread delays' for people looking to take money out of their pensions because providers have been 'inundated' with requests. He had a case where it took two months for the client to receive their cash. With all those holidays being booked, it is no wonder travel firms such as Kuoni and Thomas Cook are reporting an increase in demand for long-haul breaks. The over-50s specialist Saga Holidays told Guardian Money it has seen a 91% increase on last year in long-haul escorted tour holiday bookings. Some have claimed Reeves's move on pensions and IHT 'is destined to backfire', and creates a huge incentive to spend rather than save. However, Dragoumis says: 'If you think about it, it was a smart move from the government, as all this money will be taxed and then spent in the economy now rather than much later.' In theory we could hear more about all this when Reeves stands up in the Commons on Wednesday to announce her spring statement. There is also an argument that older people who can afford to should be spending their pension cash rather than hoarding it with the aim of passing it on to their heirs. The big danger is some people will burn through their pension money too quickly, leaving little or nothing for their final years. Legal & General issued research last month that shows, based on current spending rates, 'many retirees could be set to empty their pension pot by their late 70s, leaving nine years of unfunded retirement on average'.
