Footpath Financial Limited is a firm of Independent Financial Advisers who are authorised to advice on and arrange pensions. Based in Farnham and Crowthorne we serve the Guildford, Hindhead, Alton, Farnborough and Basingstoke areas.
Choosing a pension
As already indicated, the first place to start when choosing a pension is at the end, i.e. how much money will you need in retirement, and what resources can you call on to provide this income.
Once you have decided on the level of income you need, then we follow a step by step process with you, that will help you choose and set up your pension.
We will also be able to advise you, based on a range of projected growth assumptions, what level of contribution will be necessary to deliver the income you are looking for.
We treat pensions like any other form of investment. A pension is just a type of investment wrapper that's designed (by the government) to encourage people to fund their retirements. The process for choosing one is in fact very similar to our wealth management process and all of the options listed in our wealth management section can be held in a pension wrapper.
How do pensions compare with other ways to provide you with an income in retirement?
Favourably is the short answer.
There are various ways to build a fund for retirement, typical options might include investing in buy-to-let property, downsizing your home, building a fund of ISAs or Unit Trusts and so on.
The big difference with pensions, when compared to most other forms of investment, is that you are entitled to tax relief on your contributions. What does this mean? In general, for every £80 you contribute to a personal pension the government will gross up the contribution so you will have £100 in your scheme. If you are a higher rate tax payer, you can also claim back a further £20 in your tax return. Like ISAs, any fund growth within the scheme will also be virtually tax free.
It follows that other forms of retirement investments have got to work considerably harder to make up for the tax relief you would have received if you contributed to a pension instead. Especially when you take the effects of compound growth over a long period into account.
The other big difference of course with other forms of investment is that you can't get to your money until you reach a certain age, currently 50 years old and soon to rise to 55. So if you think you might want access to the money before you retire then a better strategy might be to invest in one of the other vehicles first (ISAs perhaps) with a view to making a series of larger single contributions as you approach retirement. This type of planning can get quite complicated so talk to us if you think the approach might suit you.
When you reach age 50 you are entitled to take 25% of your fund as a tax free lump sum. You have two broad options with the remainder: Buy an annuity or drawdown the income.
