If you are in the manufacturing trade and are thinking of taking your pension early, there are several factors that you need to consider which could potentially affect the finances of you, your career and your business.
Portafina’s guide to making the most out of your retirement fund will help you to establish guidelines that you can apply to your own pension scheme.
- Securing Your Financial Future
You have been paying into your pension fund for the majority of your life to ensure that you have financial security in retirement. However, taking your retirement fund early can disrupt this in both positive and negative ways. In some ways, withdrawing your pension early can be to your advantage as this frees immediate funds for you to invest in your manufacturing business or deal with personal finances. However, taking your pension pot now can have negative effects in the future, and leave you without the vital support that you need during retirement. To make sure that your pension choices do not affect your financial security, you should budget for your retirement and check that you have enough income from other sources or from your State Pension to support you when you retire.
- Reducing Tax on your Pension Pot
When you take your pension early, you need to operate in the most efficient way to make sure that you can get the most out of your finances and that extortionate taxes do not drastically diminish your pension pot. 25% of the money that you have put into your pension is tax-free and can be taken out any time over the age of 55 without any impact to you and your finances. However, anything over this is subject to taxation and can leave you with less in your pension fund than you would originally have had. In order to make this efficient, you should take your pension over one or two years to ensure that you do not exceed your annual income limits and get the amount that you deserve.
- Getting the Right Type of Pension
If you own your own manufacturing business, it is likely that you will have a private pension which you pay into regularly or when you have the available cash. If this is the case, as with workplace pensions, you are able to access a part or the whole of the total amount whenever you would like, as long as you are over 55. However, if you have set up a final salary pension for your occupation, you will have to switch your funds to a private pension to take them at once. However, doing this will reduce the number of benefits you have procured from working in the manufacturing industry, such as having a guaranteed income for life based on their earnings and service previous to retirement.
- Finding Financial Advice
To make the most of taking your retirement fund early, you should seek financial advice from an FCA regulated and trained advisor who can help you to determine the best course of action particular to manufacturers and your business. Portafina offers a range of job roles which can help you decide on the best option for you, along with many social media pages with an array of information, such as their Twitter accounts and YouTube videos.