Newspaper article The Journal (Newcastle, England)

Retirement Planning ( Don't Put It off for Later

Newspaper article The Journal (Newcastle, England)

Retirement Planning ( Don't Put It off for Later

Article excerpt

Byline: By Fergus Westwood

Although planning for retirement is one of the most important financial decisions an individual will make, it is probably the one that is delayed most often.

This comes as no real surprise as most people prefer to live for the day and strive to achieve their professional ambitions rather than try to meet their retirement goals.

As the nation ages, it becomes increasingly likely that the retirement age will be pushed upwards, forcing people to work for longer to pay for the growing proportion of the population that has stopped working.

Whilst this should allow greater time to save for retirement, it could prompt a tendency to delay planning, with people believing there will be plenty time to address it 'later'.

Recent years have taught us that 'leaving it for later' has its dangers and that it is vital that everyone plans for his or her retirement as early as possible.

Many individuals are clearly reluctant to deduct a portion of their salary to fund pension contributions. This is understandable: the increased cost of living over the last few years explains much of this but the complexity of pensions must shoulder some blame.

Recent changes to pension legislation were designed to simplify matters, thereby illuminating their benefits to all.

A key benefit of these changes is greater flexibility but, importantly, tax advantages that arise from making contributions to a pension remain in place.

All pension contributions are deducted from an individual's taxable earnings, reducing the amount of income tax payable.

Also, if pension contributions are deducted by an employer at source, via salary sacrifice, the individual avoids paying national insurance on the amount contributed.

And, under current legislation, an individual, by making pension contributions, can reduce capital gains tax liabilities arising from other investments.

Pension funds are able to invest in a broad range of assets, including stocks, shares and commercial property either directly or through collective investments, such as unit or investment trusts, and any capital gains within a pension are free of capital gains tax. …

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