Even with the so-called “triple guarantee” that was confirmed in the Budget, the British state pension will never provide a comfortable retirement. With the state pension being so low, the emphasis is on individuals to take charge of their own financial planning.
Whether you choose an occupational or a personal plan, you just need two things to get started. First, independent advice is essential to help you select the right product. Second, you need the impetus to start saving as soon as possible.
But while on one hand the sooner you start saving the better, it’s never too late to make some kind of difference to your retirement pot.
As a nation, only 37% of Brits save for their retirement using a private pension. Our reasons for not doing so may include the cost, suspicion about pensions and financial institutions and inertia.
Anti-pension inertia is what the government’s planned auto-enrolment scheme (NEST) is designed to tackle. By automatically enrolling employees into the scheme, a contribution to the pension scheme will be deducted every month. Workers can opt out of the scheme, but the intellectual architects of the system hope that they will never get around to filling in the paperwork and will stay members of it by default.
Perhaps NEST is based on an unfortunate assessment of people’s character, but it shows the despair that the last government felt at individuals’ reluctance to save for their retirement.
If you have serious intentions of retiring abroad, you may be no stranger to long term planning, as it can take a while to sort visas and find accommodation in your preferred destination. But while you may have thought about these day to day details, have you considered what will happen to your pension?
Your state pension can be drawn overseas but not moved in any sense, but shifting your private pension abroad may present some exciting investment opportunities.
In 2006 the previous government brought in QROPS, which stands for Qualifying Recognised Overseas Pension Schemes. Individually approved by HMRC, QROPS allow members of UK pension schemes to transfer their pension assets into foreign pension arrangements without paying UK income tax. There may be other benefits to using one too, with more choice and flexibility available in the worldwide QROPS market compared to what is on offer at home.
