Latest news with #PensionWise
Yahoo
11-05-2025
- Business
- Yahoo
Less than half of pensioners aged 65-75 ‘confident their savings will last'
Less than half (48%) of people aged 65 to 75 are confident their private pension savings will stretch for the rest of their life, research indicates. The survey, for Aviva and Age UK, took place among 1,000 people in this age group who are on a moderate retirement income, excluding people who only receive the state pension and those with more than £20,000 in annual household income from a defined benefit (DB) salary-related pension. Those taking part in the survey, carried out by consultancy Ignition House in October and November 2024, said they did not pay for financial advice. More than four-fifths (83%) said an income for life from their private pension savings has become more important to them as they get older, and the same number said they would be worried if their retirement income fell – with women more likely to feel this way than men (87% compared with 79%). Two-thirds (65%) of those surveyed do not believe there is enough support for people managing their financial needs as they age. Aviva and Age UK said the research highlights the 'pressing need' for regular financial reviews within retirement. They suggested that a 'mid-retirement MOT' could offer pensioners guidance and support while they are in retirement andwould act as a financial and lifestyle review that could include a conversation about estate planning, fraud protection, access to state benefits, and managing finances if they start to experience cognitive decline. Over-50s can access free guidance from the Government-backed Pension Wise service. Doug Brown, chief executive of insurance, wealth and retirement at Aviva, said: 'Pensioners today clearly value financial security, but many seem to be sleepwalking into later retirement with a set and forget approach to their retirement income.' Paul Farmer, Age UK's chief executive, said: 'We frequently hear from struggling pensioners, many of whom have a small private pension of their own, about how tough they have found the last few years. 'Managing your pension and other finances becomes harder as you get older – especially where people have suffered a major life-change like a bereavement or a dementia diagnosis. He added: 'The mid-70s is often a point where people need to take stock and think through their options.'
The Independent
30-01-2025
- Business
- The Independent
Martin Lewis warns against crucial pension mistake as he shares top tips for savers
Money expert Martin Lewis has issued a 'tax warning' to pension savers, giving advice that could help hold on to tens of thousands of pounds. Most personal pensions will set an age when you can start withdrawing money, which is usually not earlier than 55. But how and when you take the money is important, and could cost savers dearly if they 'get it wrong,' says Mr Lewis. Up to 25 per cent of personal pension money can usually be withdrawn as a tax-free lump sump, with the rest subject to tax based on your income tax band. However, there could be major tax savings to be made if you plan to drop a tax band in later life. Mr Lewis explains that you can take your 25 per cent tax-free lump sum and put the rest in income drawdown, an investment product that you can take money out of when you need to. Or you could opt for an annuity, which pays you a set income each year for the rest of your life. With either option, it would mean that the remainder of your pension pot (which isn't tax-free) would be taxed at the point you access the money, which may be after you have moved down a tax band. Speaking on a special pension-themed episode ITV's The Martin Lewis Money Show, the personal finance expert said: "So why is this important? Imagine that right now you're a higher 40 per cent rate taxpayer, and at a later date, once you retire, you're not going to have as much income. You'd be a 20 per cent rate taxpayer. "So you take £10,000 out right now, £7,500 of it is taxed at 40 per cent - but if you could wait for it, it'd be taxed at 20 per cent, so less tax would be paid. This could be £1,000s or £10,000s difference that you're unnecessarily paying. So please get guidance on that." The money expert advises that anyone considering the move gets free one-on-one advice from Money Helper (if under 50) or Pension Wise (if over 50). Both are government-backed services. Here are more top pension tips backed by the money saving expert: Money you put into a personal pension will effectively maintain 100 per cent of its value, advises Mr Lewis, meaning it is not taxed in the way other savings and investments can be. This is because of tax relief, where the government automatically gives back tax you would have paid as an additional deposit into your pension pot. So for someone on the basic income tax rate of 20 per cent, an £80 deposit will be boosted to £100. Those on higher rates can also claim additional relief to reclaim the right amount of tax back. 2. You could have hidden money in lost pensions If you've lost touch with a pension provider, it's possible they won't know how to pay you when you retire. This could mean tens of thousands of pounds which have been hard-saved going to waste. There are a number of steps that can be taken to ensure no pension pot is lost, with the government launching a tool in 2016 to help find old pensions. Mr Lewis said: 'Nearly three million pensions are thought to be 'lost', often these are worth £10,000 - this is not trivial money. So, try contacting your ex-employer if you know who they are and digging out your paperwork if you can. 'If not there are a number of pension tracing services, an easy one is the Pension Tracing Service tool on it can list over 200,000 pension schemes.' 3. A rule of thumb for putting money away It can be difficult to decide how much money to put into a pension. Mr Lewis gives his rule of thumb: 'Take the age you start a pension and halve it. Then aim to put this per cent of your pre-tax salary into your pension each year until you retire.' He acknowledges that this might be tricky for some, but writes that 'the real takeaway is start as early as possible with whatever you can, as you've longer for the gains to compound.' 4. How to get a 'hidden pay rise' By law, all employers must auto-enrol their employees into their pension scheme and contribute on their behalf. Since 2019, the minimum contribution rate has been eight per cent, with employers required to pay in at least 3 per cent. This means it often falls to the employee to pay the other 5 per cent. This can seem like a sizeable chunk of your income, but Mr Lewis advises against opting out. If you are not enrolled in your workplace's pension scheme, you will also miss out on the their contributions to your pot. 5. Don't accidentally leave your pension to your ex Pension savings can't be left in your will. Instead, you need to fill out an 'expression of wish' form to tell your pension provider who should receive your savings if you die. Mr Lewis advises that you should always fill one in, but don't forget about it once you do. After a divorce or break up, it's wise to change your expression of wish to ensure you're not leaving your pension to an ex-partner. When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
