Company and Private Pension Advice

How Pension Advice Can Help

Pension planning involves more than choosing a provider. The contribution level, investment strategy, charges, tax position and intended retirement date can all affect the benefits eventually available.

We can help you:

• Understand the pensions you currently hold
• Review contributions and expected retirement benefits
• Assess pension investment choices and associated risks
• Compare charges, features and available benefits
• Consider a personal pension or SIPP where appropriate
• Review pensions accumulated with previous employers
• Understand the considerations involved in a pension transfer
• Coordinate company and personal pension contributions
• Relate pension planning to your wider retirement objectives

Recommendations are based on your circumstances and objectives. Establishing a new pension or transferring an existing arrangement will not always be the appropriate course of action.

Understanding Different Types of Pension

The first step in reviewing a pension is to understand what type of arrangement it is and how its benefits are calculated.

Defined Contribution Pensions

Defined contribution pensions build a fund from contributions made by an individual, an employer or both. The eventual value depends on factors including contributions, investment performance and charges.

Personal pensions, many workplace pensions and SIPPs are defined contribution arrangements. They may provide several ways to access benefits at retirement, subject to pension rules and the options offered by the scheme.

Defined Benefit Pensions

A defined benefit pension, sometimes described as a final salary or career average pension, normally provides an income calculated using the scheme rules, salary and length of service.

These schemes can include valuable guarantees, inflation protection and benefits for a spouse or dependant. Transferring away usually means giving up those safeguarded benefits in exchange for a pension fund exposed to investment and longevity risk.

A defined benefit transfer will not be suitable for most people. Specialist regulated advice may be required before a transfer can proceed.

The State Pension

The State Pension can form an important part of retirement income but is separate from private and workplace pensions. The amount and date from which it may be payable depend on the individual’s National Insurance record and State Pension age.

A State Pension forecast can be obtained through GOV.UK and considered alongside your other retirement arrangements.

Personal and Private Pensions

A personal pension can be used to build retirement savings independently of, or alongside, a workplace pension. Contributions are invested, and the eventual value will depend on how much is paid in, investment returns and the charges applied.

When considering a personal pension, we assess:

• The amount and frequency of planned contributions
• Your intended retirement date
• Your attitude to risk and capacity for loss
• The available investment funds
• Product, platform and investment charges
• Contribution flexibility
• Available retirement options
• Death benefits and beneficiary arrangements

Regular reviews can help establish whether contribution levels and investments remain aligned with your objectives, although future investment values and retirement income cannot be guaranteed.

Workplace and Company Pensions

A workplace pension allows eligible employees to build retirement savings through contributions from their pay, usually alongside employer contributions and available tax relief.

For an employee, it is important to understand:

• How much the employee and employer contribute
• Whether additional employer contributions may be available
• How the pension fund is invested
• The charges applied to the pension
• What happens after leaving the employer
• The options available when benefits are eventually accessed

Business owners may also need to consider how company pension contributions for directors and employees fit within the organisation’s remuneration and financial planning.

Employers have separate legal duties relating to workplace pensions and automatic enrolment. Those duties begin when an organisation becomes an employer and continue after a scheme has been established.

Official information about employer responsibilities is available from The Pensions Regulator .

Pension Planning for Company Directors

A limited company may be able to make employer pension contributions for a director. This can provide a way to build retirement savings alongside salary and dividends, subject to affordability, pension allowances and relevant tax rules.

When advising a director, we consider the relationship between business and personal finances, including:

• Existing personal and workplace pensions
• Company cash flow and affordability
• Planned personal and company contributions
• Available pension allowances
• The director’s expected retirement date
• Investment objectives and attitude to risk
• Wider remuneration and tax planning
• Long-term plans for the business

Tax treatment depends on the circumstances of the company and individual. Advice from the company’s accountant or tax adviser may also be required before contributions are made.

Self-Invested Personal Pensions

A self-invested personal pension, commonly known as a SIPP, is a type of personal pension that can provide access to a wider range of investments than some standard pension arrangements.

The additional flexibility may be useful for clients who require particular investments or greater control over how their pension is managed. However, a wider investment range does not automatically make a SIPP more suitable.

Before recommending a SIPP, relevant considerations include:

• Why the additional flexibility is required
• The intended investments
• Investment knowledge and experience
• Product, administration and investment charges
• The amount being invested
• The level of ongoing management required
• Whether a simpler pension could meet the same objectives

SIPPs can involve greater complexity and may cost more than simpler pension arrangements. Their suitability must be assessed individually.

Planning Pension Contributions

The amount contributed to a pension can have a substantial effect on the fund available at retirement. Starting earlier can provide more time for contributions and investment growth, but increasing contributions later may still improve the expected position.

Contribution planning should take account of:

• Current income and affordable expenditure
• Existing employer contributions
• Expected retirement age and income needs
• Other savings and investments
• Outstanding borrowing and accessible emergency savings
• Applicable pension contribution allowances
• Whether contributions are personal or made by a company

Money committed to a pension is normally intended for retirement and cannot generally be accessed whenever required. Appropriate accessible savings should therefore be retained for emergencies and shorter-term objectives.

Pension Tax Relief and Allowances

Eligible personal pension contributions can receive tax relief, subject to applicable rules and limits. Employer contributions are treated differently and may receive corporation tax relief where the relevant conditions are met.

The amount that can be contributed efficiently may be affected by earnings, employer contributions, previous pension access, unused allowances and the level of income. Pension allowances and tax rules can change.

We consider pension tax rules as part of the wider recommendation. Where detailed company or personal tax advice is required, this should be coordinated with an appropriately qualified accountant or tax adviser.

Reviewing Existing Pension Arrangements

Many clients hold pensions from several periods of employment. A review can help establish what each arrangement provides and whether the overall pension strategy remains aligned with their retirement plans.

Depending on the type of pension, a review may consider:

• Current value and projected benefits
• Investment funds and performance
• Attitude to risk and capacity for loss
• Product and investment charges
• Contribution levels
• Available retirement-income options
• Death benefits and beneficiary nominations
• Guarantees, protected benefits or penalties

The review may conclude that an existing arrangement remains suitable. Replacing a pension solely because it is older or has not been reviewed recently would not necessarily be in the client’s interests.

Should You Combine Your Pensions?

Combining several defined contribution pensions can make administration and investment monitoring simpler. It may also provide access to different investments, charges or retirement options.

However, transferring can involve disadvantages. Before any consolidation is recommended, it is important to check for:

• Guaranteed annuity rates
• Protected pension ages
• Protected tax-free cash
• Exit penalties or market value reductions
• With-profits bonuses
• Life insurance or other attached benefits
• Changes to investment options and charges
• Differences in death benefits

Convenience alone is not sufficient reason to transfer a pension where valuable benefits or favourable terms would be lost.

Pension Investments and Risk

Most defined contribution pensions are invested. The choice of funds affects the potential for growth, the level of fluctuation and the risk that the eventual value may be lower than expected.

When considering a pension investment strategy, we assess:

• Your intended retirement date
• Attitude to investment risk
• Capacity to absorb financial loss
• Investment knowledge and experience
• Existing pensions and other assets
• The likely way pension benefits will be accessed
• The need for diversification

Investment risk may need to be reviewed as retirement approaches, particularly where withdrawals are expected to begin. Reducing risk automatically is not always appropriate, as some pension funds may remain invested throughout retirement.

Our Pension Advice Process

Understanding Your Objectives

We begin by discussing your expected retirement date, future income needs and any concerns about your current pension arrangements.

Gathering Pension Information

We obtain details of existing pensions, contributions, investments, benefits and charges. We also consider savings, investments, liabilities and other relevant areas of your financial position.

Assessing Existing Arrangements

Each pension is assessed on its own merits. We examine its features and identify any benefits, guarantees, penalties or restrictions that may affect the advice.

Research and Recommendation

Where a change or new arrangement is appropriate, we research suitable options and explain the recommendation, risks, costs and alternatives.

Implementation and Review

If you accept the recommendation, we can help implement the agreed arrangements. Where ongoing advice is appropriate, its scope, frequency and cost will be explained before it begins.

Moving from Pension Saving to Retirement Income

As retirement approaches, pension planning begins to focus on how accumulated savings may provide an income. The available options can include drawdown, annuities, lump sums or a combination of approaches.

These decisions involve different levels of flexibility, certainty, investment risk and taxation. Some choices can be difficult or impossible to reverse.

More information is available on our retirement planning advice page.

Pension Advice from Sturdy Edwards

Sturdy Edwards Financial Services provides established, independent pension and financial planning advice from its office in East Grinstead.

Our approach includes:

• A detailed assessment of your circumstances and objectives
• Careful review of existing pension benefits
• Consideration of pension charges, investments and taxation
• Clear explanations of risks and available alternatives
• Independent research across the relevant market
• Ongoing reviews where an ongoing service is appropriate

You can also meet our financial adviser team or explore our wider financial advice services.

Sturdy Edwards (Financial Services) Limited is authorised and regulated by the Financial Conduct Authority. Our FCA reference number is 190659.

View Sturdy Edwards on the Financial Services Register .

Frequently Asked Questions

Can You Review Pensions from Previous Employers?

Yes. Existing workplace and personal pensions can be reviewed to assess their benefits, investment arrangements, charges and suitability. A review does not automatically mean that a pension should be transferred.

Should I Combine My Pensions?

Not automatically. Combining pensions may simplify administration, but it can involve charges or the loss of guarantees, protected pension ages and other valuable benefits. Each pension should be assessed before a transfer is considered.

Is a SIPP Suitable for Everyone?

No. A SIPP can provide wider investment choice and flexibility, but may involve additional complexity and charges. Suitability depends on your needs, experience, intended investments and willingness to manage the arrangement.

Can My Company Contribute to My Pension?

A company may be able to make employer pension contributions for directors and employees. The suitability and tax treatment of contributions depend on the circumstances, applicable allowances and relevant tax rules.

Can I Transfer a Final Salary Pension?

A transfer may be possible in some circumstances, but it can mean giving up a guaranteed lifetime income and other valuable benefits. Specialist regulated advice may be required, and a transfer will not be suitable for most people.

How Often Should My Pension Be Reviewed?

The appropriate review frequency depends on the arrangement and service agreed. A review may also be useful following a significant change in employment, income, family circumstances, retirement plans or pension legislation.

Arrange a Pension Review

If you would like greater clarity about your private, workplace or company pension arrangements, our advisers are available to discuss your circumstances and explain how we may be able to help.

Please contact Sturdy Edwards Financial Services to arrange an initial pension discussion.