Category Archive Retirement Planning


2021 Budget Review

After a year of Covid-19 restrictions, the 2021 Budget had a lot of ground to cover. There has been considerable speculation over how the extra expense of the furlough scheme, funding the NHS and supporting those out of work would be paid for.

It was also questionable whether the current package of support for individuals and businesses could be sustained.

So what are the plans for recovering from the pandemic and rebuilding the economy? Read about the Chancellor’s budget overview in our latest publication, download it here.

If you would like to find out more information or would like to start investing today, please contact Money Advice & Planning Ltd on 0345 241 1808 or e-mail us at enquiries@mapfinances.co.uk.

The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation. Money Advice & Planning Ltd is authorised and regulated by the Financial Conduct Authority.


MAP Spring 2021 Budget Highlights

Check out our highlights of the Spring 2021 Budget from 3rd March 2021 using the reader below.


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MAP Newsletter – Quarter 4 2020

Check out the latest financial insights for the final quarter of 2020 using the reader below.

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MAP Newsletter – Quarter 3 2020

Check out the latest financial insights for the third quarter of 2020 using the reader below.

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MAP Spring 2020 Budget Highlights

Check out our highlights of the Spring 2020 Budget from 11th March 2020 using the reader below.


If the above reader does not display correctly, you can access the guide by clicking here.


MAP Newsletter – Quarter 2 2020

Check out the latest financial insights for the second quarter of 2020 using the reader below.

If the above reader does not display correctly, you can access the newsletter by clicking here.


Pension Drawdown

Pension drawdown is the process of taking money out of your pension, i.e. drawing down from it, without purchasing an annuity. A pension should really only be used in a person’s retirement, but they are accessible from age 55 onwards, so can provide an emergency fund of sorts if required.

There are many reasons why someone would go into drawdown:

  • Deferring an annuity purchase, thus avoiding being locked into low annuity rates which may apply at the time of retirement;
  • Enabling the policy holder to buy an annuity when it best suits them and hopefully when annuity rates are more favourable or provides an opportunity to avoid purchasing an annuity altogether where appropriate;
  • Enabling investors to retain control over their pension investments and allows them to continue to be invested in the markets, and hopefully make gains on their existing money; and
  • Allowing income to be varied within allowable limits thus giving valuable flexibility, which is useful for tax planning or where other income may have changed.

There are two different types of drawdown contract you can own – capped drawdown and flexi-access drawdown.

Capped drawdown allows you to withdraw income, within limits, from your pension fund without purchasing a lifetime annuity. This was the traditional method of drawdown but has been superceded by flexi-access drawdown. No new capped drawdown arrangements can now be created, however it is still possible to transfer from one capped arrangement to another and, in some cases, for additional pension funds to be added to the capped drawdown plan.

The maximum amount of income that can be drawn is 150% of a comparable lifetime annuity based on tables published by the Government Actuary’s Department. It is not however necessary for any income to be taken. Any amount of income from zero income through to the 150% maximum can be selected. The plan and maximum income will be reviewed every three years up to the anniversary of entering drawdown until the 75th birthday and annually thereafter.

Flexi-access drawdown is very similar to capped drawdown but does not have as many limits with regards the income which can be withdrawn from your pension fund; it is flexible with regards the money which can be taken out.

For flexi-access drawdown, you can choose how much income you want to withdraw without reference to any rates or limits other than the size of your pension fund. If you or your spouse is relatively young, a secured pension (lifetime annuity or scheme pension) would be less attractive due to the lower mortality factor and, in addition, there is a longer timescale to take advantage of the potential investment rewards and risks of a drawdown pension. However, the levels of income provided may not be sustainable, so in other words, your pension fund may run out.

Irrespective of what drawdown contract you have, taking withdrawals may erode the capital value of the fund, especially if investment returns are poor and a high level of income is being taken. This could result in a lower income if/when an annuity is eventually purchased, or no fund at all if fully withdrawn.

Most drawdown contracts allow for the first 25% of a withdrawal to be taken tax-free; everything thereafter is fully taxable at source.

Past performance is not a reliable indicator of future results


Pension Annuities

Otherwise known as a lifetime annuity, a pension annuity pays a guaranteed income for your life from the funds you have built up in your pension plan. Your annuity provider will pay you a regular income taxed in the same way as earnings.

The amount of income payable is dependent on your age and health, the size of your pension fund, economic factors, the type of annuity and the options you select.

You should also be aware that once you have purchased an annuity you cannot cash it in or make changes to your selected options. Also, an annuity must be purchased using funds from your uncrystallised rights held in a money purchase pension or from drawdown funds.

Some annuity providers offer annuities which pay you a higher than normal income if you have a medical condition(s) which can affect your normal life expectancy. These are called impaired life annuities. An enhanced annuity may be available if you smoke regularly, are overweight, if you have followed a particular type of occupation or live in certain parts of the country.

Annuities can be set-up to be single-life or joint-life. A joint-life last survivor annuity pays out until the second life dies, normally so long as financial dependency can be proven with the second life. Single life on the other hand is just that – it pays to a single life and dies with that person.

You can normally select at outset how often you want to receive your income payments from an annuity. Most people choose monthly, but you can be paid quarterly, half-yearly or annually. Also, income can be paid in advance or in arrears.

You can also decide whether the annuity should be level, escalating or decreasing:

  • A level annuity pays the same amount of income year after year;
  • An escalating annuity is designed to increase each year, meaning because it needs to be able to grow, the initial income will be lower; and
  • The opposite of an escalating annuity is a decreasing annuity whereby the income starts off higher and gradually lessens.

Pension annuities allow for fixed and guaranteed income and whilst this does not provide any flexibility, it does provide safety.

Past performance is not a reliable indicator of future results


Defined Benefit Pension Transfers

A Defined Benefit (DB) pension, otherwise known as a final salary scheme, is a type of workplace pension scheme in which an employer promises a specified pension payment, lump sum (or a combination of both) on retirement.

The benefits payable are predetermined using a number of factors, typically including an employee’s earnings history, tenure of service and age, as opposed to relying directly on individual returns. A typical DB pension scheme usually continues to pay a pension to a spouse, civil partner or dependents (for a restricted period) when the member dies.

There are advantages and disadvantages to DB schemes, and in most cases, the advantages far outweigh the disadvantages.


  • Your pension lasts as long as you do so there is no risk of you having no pension income.
  • Although each scheme varies, there will be something for your surviving spouse/civil partner/dependants. Typically a survivor’s pension is half of your pension income and will be paid for the duration of your spouse’s/civil partners lifetime. However, a dependants pension may only be paid for a limited period, i.e. until they reach the age of 23.
  • Some protection against inflation is provided to help you maintain your spending power.
  • Your pension does not rely on the ‘rise and fall’ of the stock market, thus making it much more secure than a personal pension.


  • The death benefits of a DB scheme are extremely rigid – if you are not married and have no financially dependent children, your fund may die with you.
  • If you are concerned with your life expectancy, your DB pension scheme may offer you a poor total capital return.
  • It is not possible to vary the level of income you receive from the scheme, thus making it largely inflexible.
  • If your employer becomes insolvent, there may not be enough assets in the pension scheme to pay your pension, although The Pension Protection Fund (PPF) may provide compensation.

Our regulator, the Financial Conduct Authority (FCA), is clear that we should start by assuming that any transfer of a DB pension into a personal pension would most likely not be suitable. Also, you cannot transfer from a DB pension scheme if you are already taking your pension. There are also some types of DB pension schemes where transfers are not possible, for example, public sector schemes for teachers, nurses and civil servants.

If your pension savings are worth £30k or more, you will be required to seek financial advice before even considering transferring a DB pension. If you leave your DB pension scheme, the benefits you’ve built up still belong to you and they can remain there until you retire or you can transfer them to a different type of pension scheme.

Past performance is not a reliable indicator of future results


Small Self-Administered Schemes

A Small Self-Administered Scheme (SSAS) is an occupational pension scheme which is subject to the normal rules and regulations for registered pension schemes, but offers greater flexibility and freedom of choice over the types of investment it can make.
There are also generous tax concessions afforded to a SSAS which are advantageous to both a company and its directors. These can be used to develop a highly effective and coordinated approach to minimising corporate and personal taxation.

SSASs are generally set up to provide retirement benefits for a small number of a company’s directors and/or senior or key staff. They can be open to all employees and their family members, even if they don’t work for the employer. The number of members is generally limited to 12. Contributions may be made to the SSAS by the members and/or the employer. Each receives tax relief on contributions made, subject to certain conditions.

Most types of conventional investments are freely permitted including quoted stocks and shares, unit trusts, insurance policies, commercial property and employer related investments or loans, but there are some restrictions designed solely to prevent abuse.

Any SSAS holding prohibited assets directly or indirectly will have all tax advantages removed which will broadly mean that it is at least no more advantageous to hold such assets in a pension scheme than it is to hold them personally. Prohibited assets include direct or indirect investment in residential property and certain other assets such as fine wines, classic cars and art & antiques.

The trustees of a SSAS may make loans to the employer, but not the members.

To be eligible to invest in a SSAS and receive tax relief on personal contributions, an individual investor must be under 75 years of age, and resident in the UK (there are some exemptions for individuals who work for the UK Government or have left the UK in the last few years).

Contributions can also be made by your employer or a third party e.g. parent or spouse. The minimum contribution will vary between providers but is usually around £20 per month, and these can be stopped and started at any time.

Given the many tax advantages that are available with regard to funding a personal pension there are limits to the tax-relievable contributions that can be paid. Individuals are able to make contributions of up to the greater of £3,600 or 100% of their annual earnings to all of their pensions each tax year and receive tax relief on them.

There is also an annual limit on the total amount of pension contributions that each person can make without incurring a tax charge (this includes employer and employee contributions). This is called the annual allowance. Where the total employer and/or employee contribution exceeds the annual allowance a tax charge will apply.

It may also be possible for contributions in excess of the Annual Allowance to be paid in some circumstances under the rules which allow unused Annual Allowance from the three previous tax years to be brought forward and added to the current year’s Annual Allowance.

Past performance is not a reliable indicator of future results