By: RAOUL RUIZ MARTINEZ
Investment Advisor, euroFINESCO
Raoul Ruiz Martinez is based in the Algarve office of euroFINESCOs.a. as an Investment Adviser for Finesco Financial Services Ltd., Glasgow and regulated to advise on capital investments in both the UK and Portugal. He can be contacted either by telephone on 289 561 333 or by email [email protected].
Finesco Financial Services Ltd is authorised and regulated by the Financial Services Authority (FSA). Some of the services provided are not regulated by the FSA because they are not included within the Financial Services and Markets Act 2000.
DURING THE last two months conversations around the dinner table have been primarily on the banking sector and the slow down of the property market, media coverage being what it is. These conversations vary, depending upon the age group of the participants. One thing however is consistent; pensions are interesting.
Over the last few years pensions have received some bad press through governments and their financial legislation, so most enterprising individuals have poured their cash into property portfolios that have increased their holdings in off-plan properties. Stock markets also enjoyed a wonderful renaissance since the aftermath of the bursting of the dot com bubble and September 11.
Interest rates have increased to an attractive level for saving, but no sooner had this point been reached than banks demonstrated that they can also mismanage money and savers have moved their capital as a result.
All of a sudden, conversations have gone full-circle back round to pensions again and most of us now realise that things weren’t as bad as they first appeared.
Those that are on the eve of retirement will be pleased to know that the UK revenue has reduced the number of qualifying years for those reaching the State retirement age by April 5 2010.
What this means in simple terms is that in order to qualify for a full basic State pension, the number of years an individual has to have paid full national insurance contributions is now only 30. You can easily get a State pension forecast on-line and a response within a few weeks.
Others that are yet to retire and perhaps have made some gains from the property investment boom or stock markets are now considering the option of putting the capital aside to start up their own private pension. In the UK, contributions to private pension funds have some fantastic tax breaks. Indeed, those that are in this position are also researching with their tax or financial advisers on how the cash is taxed when they start to draw it out as income.
Those who are currently in retirement and have access to capital from the sale of their UK main residence, or perhaps a lump sum from a qualifying endowment policy, can also place what may have been tax-efficiently earned capital into a private pension fund.
Anybody transferring their hard-earned cash into a private pension plan will be able to create a pension fund that can be personally tailored with tax-efficient investments to provide regular income for life that may very well supplement other incomes such as a basic State pension.
Of course there are those who are in their 20s or 30s and have the opportunity to add monthly premiums into a pension fund of their choice.
Their pension can also be designed around a number of different investments such as the stock market or commercial property that can be restructured over time so that after another 20 or maybe 30 years, they will have access to some of the capital that they have built up and a source of income. It feels good to have a personal pension plan back as a considered option.
As the source of your capital branches out from the pension tree, make sure that you consider all your options by taking the right advice through your financial and tax advisers.
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