 |
Retirement Planning
Pension Rules
• A maximum lifetime allowance for Pension Funds of £1.65m (2008/09) increasing to £1.8m by 2010.
• Contributions are limited to 100% of salary with a maximum of £235,000 per annum (2008/09) increasing to £255k by 2010.
• The earliest retirement age moves to 55 from 2010.
• You can take benefits from a Pension Fund and continue working.
• 25% of a Pension Fund can be taken as tax-free cash.
• You can take the tax-free cash and decide to defer taking an income.
Providing the right level of income in Retirement
As a general rule you can multiply the level of income by 25 to calculate the total amount of money you will need at age 65 to provide that income.
The cost of delay
If a level gross investment of £10,000 pa into a Pension Fund commenced at age 30, a projected fund of £713,000 would be available at age 60. This example shows what could happen if the start of the regular annual contribution was delayed by 5, 10 or 15 years.
Years to Retirement |
Fund Value |
% Reduction in fund |
25 Years |
£510,000 |
-28% |
20 Years |
£352,000 |
-51% |
15 Years |
£228,000 |
-68% |
