It’s time to think about retirement (From The Northern Echo)

It’s time to think about retirement

9:15am Friday 28th November 2008 in Search

OVERSEAS holidays, a pristine garden, days on the golf course and leisurely days out – the epitome of modern day retirement and one we would all hope to experience when the time arises.

Unfortunately, it is one we are going to have to fund for ourselves if the Government continues to press ahead with its borrowing plans.

This week, Alistair Darling produced a pre-Budget report which, in summary, meant he was to borrow his way out of the recession and in the long run, we the taxpayer would end up picking up the cost.

This included potential long-term cutbacks in public services such as health and education.

Rumours have been rife for many years that if you are under 40, for example, the chances of you getting a state pension as we know it now, are very slim, as the Government simply cannot afford it. This week’s announcement would seem to put the final nail in this coffin.

So what are your options?

With the housing boom over for the moment, and with a lack of monies being made available to purchase rental properties, fewer people will choose to save for retirement by buying property.

As savings rates also tumble, bank deposits are looking unattractive, so there has to be an alternative. A return to good old-fashioned pension plans perhaps?

Pension reforms have taken place many times in recent history, some of which have made saving for retirement attractive again, with lower charges, greater fund choices and fewer shackles, such as the insistence on buying an annuity immediately on retirement.

This week, we were told there would be a five-year freeze in the lifetime and annual allowances for pension contributions from 2010-11 to 2015-16.

This means it will be even more important for people with pension rights built up before April 6, 2006, to protect them from the 55 per cent tax charge.

The deadline for registering for protection is April 5.

■ Karl Pemberton is the director of Active Financial Services in Guisborough. He can be contacted on 01287- 632367 or through activefinancialservices.co.uk and will answer readers’ financial questions in a bi-weekly column.

Any topics you would like to see featured in his column should be sent to echobusiness@nne.co.uk The information contained in this response should not be relied upon as general advice and is for general information only. We always recommend you seek independent financial advice before embarking on any financial decisions.