Why pension planning?
Let’s face it; the current public perception of the Pension Planning is generally one of disinterest. In fact, at the moment it is so low on their priority scale that it may be some time before it appears on their ‘to do’ list. Falls in fund values have also magnified the quandary, and it is no surprise that one of the most topical questions on financial discussion forums is ‘Should I continue with my pension?’
Business owners are focused on cutting costs, and pension contributions are taking a back seat to ensure the survival of the business, where necessary. The end of the tax year in almost upon us and all pension providers are seeing reductions in contributions and increases in the number of requests for contribution ‘holidays’. Those were thinking about starting a pension have put it on the long finger.
This is a natural outcome of the financially stretched times we are living through. Why would a business owner put money into a pension fund now that they will not see the benefit of until some distant date in the future, when they may need that money to survive the downturn?
Because pensions are one of the most tax efficient methods of saving, it still makes perfect sense to avail of the relief’s available. This is particularly the case where someone is paying tax at the highest rate. If you are a Company Director, it is also prudent to try and take money out of the Company, in a tax efficient manner, for your ultimate personal benefit.
For those who currently have a pension plan, now is a good time to revisit what you have. As we are all focused on cost cutting at the moment, it may be a worthwhile exercise to question the level of charges on your existing pension plan and check to see if the fund/s that you are invested in are in tandem with your risk profile. If you are unhappy with either of these two factors, you should consider switching funds or changing provider. High charges will drag down the value of your pension fund.
If you have not yet started your pension planning, make sure you put in that extra bit of legwork on your research at the outset so that you can prevent any disappointment that the wrong charging structure or unsuitable fund/s may throw up at a future date. Contrary to popular belief, the past performance of a pension fund manager should not be a deciding factor in product selection. It is more prudent to focus on costs, flexibility and suitability.
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