Pensions

Understanding Pensions

A pension is a long-term savings plan with significant tax benefits. Contributions normally receive income tax relief, investments grow free of income tax and capital gains tax, and from age 55 (rising to 57 in 2028) you can start drawing benefits.

There are three main types of pension:

Workplace pensions set up by employers, often with matched contributions.
Personal pensions or SIPPs (Self-Invested Personal Pensions), where you choose the provider and investments.
Defined benefit schemes (sometimes called final salary pensions), which provide a guaranteed income based on earnings and service.

Each type works differently, with its own strengths and limitations. We help you understand what you have, what it’s worth, and how it fits into your wider plans (e.g. state pension, other savings and investments).

Saving into a Pension

Pensions are one of the most effective ways to build long-term financial security. They combine valuable tax advantages with the potential for investment growth, making them central to most retirement plans.

When you pay into a pension:

Tax relief is usually added to your contributions, boosting the amount invested. For example, a £100 contribution only costs a basic-rate taxpayer £80.
Investments grow tax-efficiently, free from income tax and capital gains tax.
Employer contributions may be added if you are in a workplace scheme, which is effectively “free money” towards your retirement.

Over the course of a career, these benefits can make a substantial difference to the amount available at retirement.

Consolidating Pensions

Over a working life, many people end up with several pensions from past employers or providers, often with different charges, investment approaches, and paperwork. We can help you:

Locate and review existing pensions, including old or dormant schemes.
Consolidate plans where appropriate, so your pensions are easier to manage and potentially more cost-effective.
Optimise contributions to make full use of tax relief and employer contributions.
Align investments with your retirement goals, risk profile, and time horizon.

Consolidation isn’t always the right choice, for example, some schemes have valuable guarantees that are worth retaining. We explain the pros and cons clearly so you can make informed decisions.

Drawing Income in Retirement

When you reach retirement, you’ll need to decide how best to draw from your pension. Broadly, there are three main options:

Flexi-access drawdown – keep your pension invested while drawing a flexible income as required. This provides choice but carries investment risk, as the fund value can fall.
Uncrystallised Funds Pension Lump Sum (UFPLS) – take lump sums directly from the pension. 25% of each withdrawal is tax-free, with the rest taxed as income.
Annuities – use some or all of your pension to buy a guaranteed income for life (or a fixed period). This removes investment risk but is less flexible.

Often, the best solution is a combination. For example, some clients use drawdown for flexibility and retain part of their pot for an annuity later in life, once income security becomes more important. We can explain your options, model the outcomes, and help you decide which approach best suits your needs.

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Retirement Planning

Tax Allowances and Planning

Tax efficiency is critical when saving into and drawing from pensions. Key rules include:

Annual allowance – contributions up to £60,000 a year normally attract tax relief (subject to tapering for high earners).
Carry forward – unused allowances from the previous three tax years may be carried forward, creating opportunities for larger one-off contributions.
Tax-free cash – usually up to 25% of the pension pot can be taken tax-free at retirement.

We can help you structure contributions to make the most of available reliefs, and plan withdrawals to minimise income tax over retirement.

Ongoing Support

Pensions need to be monitored and managed, both while you are saving and once you start drawing income. Circumstances, tax rules, and investment markets all change over time, so regular reviews are essential.

We provide ongoing support to:

Track the performance of your pension investments
Adjust contribution strategies to make the best use of allowances and tax relief
Review income withdrawals to ensure sustainability and tax efficiency
Update cashflow modelling as your plans, spending, or market conditions change
Keep your overall retirement plan aligned with your long-term goals

The aim is to give you confidence that your pension remains on track and continues to support your retirement throughout life.

Oliver Financial Planning

98 Bay Tree Rd, Bath BA1 6NF, UK

01225 336 486

Oliver Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority. Financial services reference number: 963900.

Our company number is: 13205258. Registered office address: 30 Circus Mews, Bath, BA1 2PW.

Investment Risk Warnings

All investments carry an element of risk, and the value of your investments can go down as well as up, so you could get back less than you invested.

A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of fund when accessed, interest rates and legislation.

A Protection plan will have no cash in value at any time, and will cease at the end of the term. If premiums are not maintained, then cover will lapse and you may not be covered if a claim is made