Personal Finance: Light at End of Pension Tunnel; More and More People Are Faced with Having to Make Good Shortfalls in Their Pensions. Tony Pounds, of Cavanagh Financial Management, Birmingham, Looks at Some of the Options
Byline: Tony Pounds
The public's faith in their pension plans has been shaken to the core by the headlines surrounding some of the biggest names in the life assurance sector as they have had their perceived invincibility challenged by a sharp blast of commercial reality.
Many people are concerned their current pension arrangements will not provide them with the lifestyle they need in retirement.
However, there are options and actions you can take that will provide some welcome financial light at the end of your pension tunnel.
Alternatives to traditional pension plans come in a number of forms and I have selected some you may wish to examine.
Individual Savings Accounts (ISAs) are an excellent tax efficient vehicle and right now is the height of the ISA season. And many fund managers offer plans with very competitive charging structures.
Unit trusts or investment trusts are a good alternative for those who have used up their ISA allowance as both consistently outperform banks and building society savings and their running costs are highly competitive.
Companies who are prominent in these fields are Fidelity, Schroders, Invesco, New Star and ISIS Asset Management.
Investment bonds can also be considered for retirement planning especially for higher rate tax payers as up to five per cent can be withdrawn each year which can be an excellent way of supplementing your income in the early years of retirement.
Despite all the press coverage surrounding endowments, in relation to mortgages, they can help with retirement for higher rate taxpayers who are restricted in what they can pay into a pension plan. …