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The impact of living longer on retirement planning - The challenge facing investors in retirement

Talking to your clients about pension allowances is an all year round conversation and the focus naturally increases as we approach Tax Year End. Here are some key considerations to help you make the most of these allowance conversations with your clients.

Gareth Davies

Specialist Business Development Manager
Scottish Widows

Know your limits

The introduction of pension freedoms may have led to an increase in flexibility and choice, but it’s also true that frequent rule changes have made pensions funding a minefield of complexity. Clients need advice to ensure their pension planning is as tax efficient as possible, and to take maximum advantage of all relief that is available to them. That’s why it’s important to know what the main pension allowance limits are now and for previous years. Especially since a total of £2,138m of pensions contributions by individuals exceeded the annual allowance limits between 2011 and 2018.*

an opportunity to engage

One of the main issues facing our industry is how to engage clients in a timely manner. Your existing client base is one of the most important assets for your business, but finding ways to engage with them can be challenging.

Do you know which of your clients have not utilised all of their allowances yet, and have historically been in a position to top up their pension? If so, this can be a great opportunity to contact them to highlight the potential tax saving opportunities that additional pension funding could offer, in order to demonstrate the value of your advice. And it’s not just about the current tax year. With the possibility of reform to pensions tax relief legislation constantly on the political agenda, it is always a good opportunity to talk to clients about how they can make maximum use of their available allowances and reliefs.

Leave yourself enough time

There will always be an increased demand from clients for tax planning advice conversations at Tax Year End and also at the start of a new tax year.

However, highlighting the importance of these financial planning considerations all year round can help to manage and mitigate the effects of these annual increases in client demand for advice.

It’s a good idea to contact providers as early as possible. Remember you can also use our online services to top up your clients’ existing plans, saving you time and allowing you to focus on helping your clients.

How Scottish Widows can help

  • Watch our CII accredited Techtalk MasterClasses to refresh your technical tax planning knowledge.
  • Read TechTalk, our industry renowned publication, and its related article archive, which contains useful articles on the technical aspects of pensions and tax, including Carry Forward and tax planning.
  • Download our annual TaxFacts leaflet to keep you up to date with all of the need to know tax figures and allowances.
  • Use our tools and calculators to help with your pension funding conversations. Look out for our Carry Forward tool which helps calculate unused annual allowances, the effect of the Tapered Annual Allowance and the maximum a client can pay into their pension for the current tax year, without exceeding their annual allowance.
  • Administer your business quickly and efficiently through our online services.

For further information and support visit our Tax Year End page on our Adviser website.

* Source: Total value of pension contributions exceeding the Annual Allowance reported through Self Assessment, HM Revenue & Customs, Table 7, Pensions Annual Allowance Statistics, September 2019.

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