Wish You Were Here?



Lots of us were born in the 50s, ‘baby boomers’ and one of the luckiest generations ever, going to university with no fees and a free student grant in the 70s, beneficiaries of Nigel Lawson slashing the top rate of tax from 60% to 40% in the 80s and then over the next three decades the value of our houses more than trebled. But as we approach retirement will we continue to be so fortunate?

Whilst we all tend to put off reviewing our finances if they seem complicated, there are a number of relatively simple matters which could improve your retirement.

Request a state pension forecast online at, then search for ‘state pension forecast’ to see if you can improve your benefits by making backdated contributions. When working out if this is worthwhile, remember a spouse may be entitled to a partial pension by reason of their current or ex-spouse’s contributions or through home responsibilities protection if they have claimed child benefit. Deferring taking the state pension could also benefit you, particularly if your tax rate will be lower in the future, but if you don’t claim it your pension is now automatically deferred.

As with all financial planning, it’s best to spread your money. Overpaying your mortgage is a low risk strategy – you will save all future interest payments compared to investing the money, possibly with a lower return, on which you may have to pay tax.

Whilst pensions give tax relief when any contributions are made, any income paid out of a pension is taxable, after you have taken up to 25% of the fund as tax free cash. Building up a pot to produce tax free income in retirement, such as ISAs, VCTs and certain National Savings products, will also allow you access to the capital should it be required.

If you are considering buying an annuity, gradually moving out of riskier stock market investments can help to protect your benefits and boost your pension income. A market dip just before your retirement could significantly lessen your pension pot.

Four in 10 of us might qualify for a higher level of pension by reason of our health. These ‘enhanced’ annuities not only apply to those with significant health problems, but also to anyone who smokes, is substantially overweight, diabetic or taking medication for problems such as high blood pressure or high cholesterol.

Most importantly, consider taking advice on your retirement plans to ensure the lifestyle, financial and tax positions are fitted together to produce the best possible outcome.

Partner, Rothmans Eastleigh
Director, In Partnership Financial Design Ltd

Download a PDF of this article