Start a pension
Generally the earlier you start paying into your pension the better. This gives you longer to build up your investment and to benefit from the long term potential of the stock market. Also, pensions are a tax-efficient way of investing for your future retirement. Every time you contribute, the Government does too.
Don’t forget you can start a Virgin Pension with small amounts and you can stop, start, increase or decrease your payments whenever you need to, giving you complete control over how much you pay.
You can make payments by direct debit or lump sums. The good news is that the tax man will top up each payment by 25% (and higher rate taxpayers can get even more).
Don't forget, tax benefits depend on individual circumstances and may change in the future.
Choose how you invest
When you invest for your retirement you need to think about how hands-on you want to be in 'growing' your investment, and 'looking after' your investment as you approach retirement.
We have two options available for you to consider:
Make payments to build up your pot
You can start a Virgin Pension from as little as £1 and pay in lump sums or regular payments.
With a Virgin Pension you can stop, start, increase or decrease your payments whenever you need to giving you complete control over how much you pay. Please remember, stopping or reducing your payments will reduce the amount you get back from your pension.
You could consider consolidating your pensions. If you have several different pension pots, there are potential advantages if you consolidate them into one:
However, there are potential downsides to watch for too:
You can transfer other pensions into a Virgin Pension; however, you would need to make sure it was the right thing for you to do. If you would like more information please contact us. You should get financial advice before moving your pension schemes, unless you are confident that you understand the costs, benefits or risks involved.
If you are unsure and would like to seek independent financial advice, please visit www.unbiased.co.uk to find a financial adviser in your area.
Checking your progress
To make sure you are on track to meet your retirement goals, it’s important to review your pension savings and estimate the income they’re likely to generate when you need to access them.
If there's a shortfall in your savings, the earlier you spot it the easier it may be to remedy. With a Virgin Pension you'll get statements twice a year showing the value of your pension and you can keep track of your pension 24/7 online, or by phone. Don’t forget you can make lump sum payments or increase a regular payment whenever you want to.
Research and prepare for retirement
The earliest you can currently access your pension savings is your 55th birthday (57th birthday from 2028). You don’t have to retire or stop working to take your benefits.
As you may be aware, in March 2014 the Government made some changes to the way you can access your pension savings to make it more flexible for your needs. You now have a number of options depending on how you’d like to access your pension savings.
An income for life or flexible access
You could transfer your money out to buy an annuity. This converts your pension fund into a guaranteed regular income for life. Or take a drawdown pension which lets you draw an income whilst leaving the rest invested for potential further growth. Another option is to simply take a lump sum, but this has tax implications.
Please note that Virgin Money doesn’t currently offer annuities (when you buy an annuity your pension savings are converted into a regular income for life or a fixed period) or drawdown products (lets you draw an income from your pension savings whilst leaving the rest invested).
Another option is to take an uncrystallised lump sum as cash in one go or make a series of withdrawals over time. For each amount taken, you receive 25% tax-free cash with the 75% balance taxed at your marginal rate of income tax. Virgin Money will be providing you with the option to take all your pension savings in one go or if you want to make a series of withdrawals over time, you could transfer your pension savings to a different provider who offers that option.
Choosing the right option for you
To make your choice it is important to have all the details of your pension savings. The value of your pension varies on a daily basis, but you can receive an up-to-date valuation at any time by calling our automated balance enquiry line on 0800 917 97 91.
Taking all your fund as a small pension lump sum
If your fund value is less than £10,000, you may be able to take the whole amount as a lump sum under the rules for small pensions.
25% of the lump sum is paid to you tax-free and the rest is taxed at the basic rate of tax before it is paid to you. If you have any additional tax to pay or over paid tax to reclaim, you can do this through your income tax self assessment form or you can contact HMRC for assistance.
If you are interested and would like to find out more, please call us on 08456 10 10 67 and we can tell you more.
If you have other sources of income in retirement, it might be worth delaying accessing some of your pension savings until you need it, but this can be complex to work out. It is a very good idea to discuss the implications of postponing taking your pension benefits with a financial adviser before deciding to do this. To find one in your area visit www.unbiased.co.uk.
You could also use sites like the Money Advice Service to do your research in the run-up to your retirement.
You may want to read about the changes announced by the Government in the 2014 Budget.