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Why preparing for retirement has never been more crucial

A new study reveals how people in the UK manage their pensions, highlighting notable differences based on gender, income and relationship status. Almost half (44%) of those surveyed consider themselves the main organiser of pensions in their household, while 22% of people in relationships believe their partner fulfils this role[1].

This gap highlights a potential communication issue within couples, emphasising the importance of open discussions about retirement goals. Interestingly, men are more likely to see themselves as pension planners (54%) compared to women (35%). While this might suggest a confidence or engagement gap, it also prompts questions about how each gender perceives financial knowledge and leadership roles within households.

THE SAND DILEMMA
Alarmingly, nearly three in ten (29%) people aged 45 to 54 admit to ‘burying their heads in the sand’ regarding their pensions. Although most already have workplace pensions, their uncertainty about where to start highlights the importance of accessible tools and guidance that make retirement planning easier.

Income also seems to affect pension planning habits. Just a third (33%) of those earning £35,000 or less see themselves as pension planners. This may reflect concerns about affordability or a broader disengagement from long-term financial planning. Conversely, engagement rises with income, with two-thirds (66%) of those earning between £75,001 and £100,000 taking an active role, and this increases to 80% among those earning over £125,000.

BEYOND INCOME-DRIVEN TENDENCIES
The trend among higher earners might indicate that greater disposable income allows individuals to take control of their retirement planning. However, in many households, one partner often focuses on pension contributions while the other manages daily expenses. This joint financial effort may appear to be the work of a single pension planner, when in fact it is a mutually agreed-upon strategy.

Furthermore, the study highlights how couples manage their retirement savings. One in five claim their partner takes charge of the planning, reflecting reliance on each other. Notably, over one in ten couples (13%) admit to both of them being procrastinators when it comes to discussing their future retirement, which clearly calls for taking action to initiate conversations sooner.

FROM HESITATION TO ACTION
For some people, a reluctance to plan stems from feeling overwhelmed by the complexity of pensions. The language can be intimidating, and many lack confidence in choosing the correct options or knowing how much to contribute. These barriers can lead to inaction, but the good news is that overcoming them is possible, especially with the availability of online resources, expert advice and financial education.

The challenges arise not only from a lack of knowledge, but often from prioritising short-term costs over long-term savings. It’s natural to focus on daily expenses, but saving even small amounts for pensions can provide substantial benefits in ensuring future financial stability.

FINDING THE BALANCE
Finding the right balance between enjoying the present and saving for the future is essential. Retirement may seem a long way off to some, but starting earlier – even with smaller savings – can significantly benefit from the power of compound growth. For those who start later, increasing contributions and exploring tax-efficient pension options can help them get back on track.

Having open discussions within families or with us can also bring clarity and reduce the fear of the unknown. These conversations are vital not only for raising awareness but also for encouraging mutual understanding of shared goals.

EMPOWER THE PROCRASTINATOR WITHIN
Every pension procrastinator has the potential to become an active planner if equipped with the right tools and mindset. Breaking the process into manageable steps can be empowering. Start by reviewing your existing pension statements or logging into your workplace pension portal to understand your current situation. Then, take the time to set realistic goals and explore resources, such as pension calculators, to estimate your future needs.

Finally, remember that retirement planning isn’t a one-time task. Regular reviews, adjusting contributions in line with salary increases and checking for any changes to pension regulations can all help keep you on track towards your goals.

TAKE CONTROL OF YOUR FINANCIAL FUTURE
With the UK’s ageing population and increasing life expectancy, preparing for retirement has never been more important. Whether you see yourself as a skilled pension planner or an uncertain procrastinator, the key to success is to take action, no matter how small the first step might seem.

Ready to talk retirement planning?
If you’re ready to take control of your retirement planning or need more professional guidance, it’s never too late – or too early – to start building the future you deserve. To discuss your future plans, please don’t hesitate to contact us.

Source data:
[1] The research was carried out by Censuswide, involving a sample of 2,000 general consumers who are in a partnership, married, or in a registered civil partnership. The data were collected between 15 May 2025 and 19 May 2025. Censuswide adheres to and employs members of the Market Research Society, following the MRS code of conduct and ESOMAR principles. It is also a member of the British Polling Council.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. A pension is a long- term investment not normally accessible until age 55 (57 from april 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available.

Unlocking the potential of your investments and securing your financial future

When it comes to growing your finances, few decisions are as crucial to long-term success as remaining invested. The temptation to move to cash during volatile periods can be strong, but financial history and market principles often favour those who keep their positions. Staying invested isn’t just about patience; it’s about unlocking the potential of your investments, capitalising on market trends and safeguarding
your financial future.

Understanding why staying invested is so effective begins with examining the main reasons behind its success. From growth through compounding to controlling emotional biases, let’s explore the key benefits and practical strategies that underpin this fundamental principle.

LONG-TERM GROWTH POTENTIAL BREAKS BARRIERS
One of the strongest reasons to stay invested is the opportunity to benefit from long-term growth. Historically, investment assets such as stocks and shares have consistently beaten inflation, delivering strong returns over long periods. By maintaining your investments, you also benefit from the power of compound interest. This powerful mechanism boosts the value of your initial investment over time, leading to exponential growth that cash savings accounts simply cannot match.

Consider the example of investing £10,000 in a broad stock market index that averages a 7% annual growth rate. Over 20 years, compound interest could increase that amount to more than £38,000. Compare this with leaving the same £10,000 in cash, where inflation and limited returns might erode its purchasing power.

TIMING THE MARKET VS. TIME IN THE MARKET
Attempts at ‘timing the market’ frequently lead investors along an uncertain route. Shifting investments into cash during dips and re-entering when markets ascend results in exposure to misjudgements. For instance, selling during a market downturn could mean missing the subsequent recovery and the financial gains that often follow. Similarly, staying in cash during upward trends might forfeit valuable opportunities.

The adage ‘time in the market, not timing the market’ captures this perfectly. Those who remain steady through market volatility are more likely to benefit from long-term trends and protect themselves against the emotion rollercoaster that often accompanies investing.

DIVERSIFICATION SHIELDS AGAINST RISK
Diversification is another essential part of the stay-invested approach. Spreading investments across different assets, sectors and geographical regions can help protect against market-specific risks. For example, profits from technology stocks might offset downturns in the property industry during a certain economic period, leading to a more balanced overall portfolio.

For long-term investors, maintaining a diversified portfolio can help stabilise performance. The balance between growth- oriented stocks and safer assets, such as bonds, provides more stable returns even during challenging financial periods.

CASH SAFETY COMES AT A COST
Although cash feels secure, especially during economic downturns, it has notable disadvantages. Even with relatively high interest rates, cash savings often experience a ‘real return’ shortfall. When inflation is taken into account, cash diminishes purchasing power instead of maintaining or increasing it over time.

For example, a current savings account with a 3% annual return will lose real value if inflation exceeds that rate. This highlights the importance of weighing the opportunity cost of holding cash against
potential returns from investments.

EMOTIONAL BIASES AND THE POWER OF RATIONALITY
Investors often encounter emotional biases such as fear during market crashes and greed in bull markets. These emotions can lead to poor decisions, like selling too early or investing recklessly. Staying invested, however, helps minimise these behaviours. Adopting a careful, long-term strategy based on informed goals is a more reliable approach.

For example, during the 2008 financial crisis, those who stuck to their investment plans and remained invested recovered losses and enjoyed significant market gains in the years that followed. This demonstrates the resilience of staying the course.

TAX EFFICIENCY AND STRATEGIC GAINS
Beyond market outcomes, continuing to invest can provide potential tax advantages. Selling assets might trigger capital gains taxes, particularly where gains are above the £3,000 annual Capital Gains Tax (CGT) allowance, at which point there is a tax charge at 18% or 24%, basic rate band and above, respectively.

Additionally, certain assets, such as UK government bonds, benefit from preferential tax treatment, enabling investors to maximise their returns while complying with tax regulations.

RESILIENCE OF FINANCIAL MARKETS
History consistently demonstrates that financial markets can recover from even the harshest downturns. From the Great Depression to the dot- com bubble and the 2008 financial crisis, markets have shown a proven ability for rebounding and growth. By remaining invested, you increase the chance to benefit from these recoveries and position yourself for long-term gains.

Investors who endured the short-term volatility caused by COVID-19’s market impact in 2020 saw notable rebounds in 2021. Staying invested proved beneficial, emphasising the importance of a disciplined, long-term strategy.

Need guidance to secure your success for tomorrow?
Careful planning is essential. Regularly reviewing your portfolio ensures it aligns with your goals and can be adjusted as needed. Making informed decisions today can secure your success tomorrow. To discuss your future plans, please contact us.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. The value of your investments can go down as well as up, and you may get back less than you invested.

Why larger pension contributions can have a significant impact.

Pensions are a crucial component of financial planning, particularly for individuals seeking to secure a comfortable retirement. For some, increasing pension contributions can be a strategic move to make up for missed savings or to maximise tax-efficient benefits. However, understanding the rules around contributions requires careful consideration to avoid potential pitfalls.

Large contributions can assist individuals who have delayed pension saving due to cost concerns or competing financial priorities. They are also attractive for those looking to transfer significant funds into a tax-efficient account. However, there are annual limits to consider, and understanding how these operate is essential to avoid unnecessary charges.

HOW PENSION CONTRIBUTIONS WORK
When you contribute to a pension plan, your contributions benefit from tax relief. For personal pensions, such as a Self-Invested Personal Pension (SIPP), your provider claims 20% tax relief from HM Revenue & Customs (HMRC). If you are a higher or additional rate taxpayer, you can claim additional relief through your self-assessment tax return or tax code adjustment for higher rate only, which can significantly reduce your overall tax bill.

Another advantage is that your investments grow tax-free as long as they remain within the pension. Investment income, interest and any gains are exempt from taxes. However, remember that once you start withdrawing from your pension, Income Tax will be applicable, except for the current first 25% (often called the tax-free lump sum), up to a maximum of £268,275 for most people.

UNDERSTANDING YOUR ANNUAL ALLOWANCE
Your own pension contributions that qualify for tax relief are subject to limits. This is capped at the higher of 100% of your UK taxable earnings or £3,600 (including tax relief). There is also an annual allowance that limits how much you and others can contribute across all your pensions each tax year without incurring additional taxes.

For the 2025/26 tax year, the annual allowance is set at £60,000. For defined contribution pensions, this allowance is straightforward to calculate; it includes your contributions, tax relief and any payments made by employers or third parties. However, for final salary or defined benefit pensions, the situation is more complex. The annual increase in the pension’s capitalised value over the tax year is used as the benchmark, and your scheme administrator can perform this calculation.

IMPACT OF TAPERED ALLOWANCES
High earners might face a reduced annual allowance, known as the ‘tapered annual allowance’. This applies if your threshold income exceeds £200,000 and your adjusted income surpasses £260,000. It could reduce your annual allowance to as little as £10,000, depending on your earnings and employer contributions.

After retirement, opting for flexi-access to your pension, such as through drawdown, triggers the Money Purchase Annual Allowance (MPAA) as soon as anything above your tax free lump sum is withdrawn. This limits your tax-efficient annual contributions to money purchase pensions to just £10,000 (including employer and third party contributions as well as your own). Recognising these restrictions is crucial to avoiding tax
penalties on excess payments.

CARRY FORWARD UNUSED ALLOWANCES
If you haven’t used your full annual allowance in previous tax years, you may be able to carry forward unused portions to make larger contributions now. This rule allows you to access unused allowances from the past three tax years, giving you the opportunity to ‘catch up’ on missed contributions.

Carry forward is particularly helpful for self- employed individuals with fluctuating incomes or those expecting large contributions from a windfall, such as an inheritance or the sale of a business. However, the process has certain requirements. For example, you must have been a member of a UK-registered pension scheme in previous years, and your earnings in this tax year must support the contribution amount you plan to
make if the contribution is to be a personal one.

PLANNING FOR EMPLOYER CONTRIBUTIONS
For business owners, there is greater flexibility when making contributions through a company. Employer contributions are permitted up to the individual’s annual allowance and carried forward amounts. Importantly, these payments do not need to be connected to taxable income. However, if they are to receive Corporation Tax relief, the company contributions must satisfy the ‘wholly and exclusively’ test, ensuring they are reasonable in relation to your role and salary.

Remember that in previous years, the annual allowance was lower, limited to £40,000 prior to the 2023/24 tax year. Also, any reductions due to the tapered annual allowance must be included. These details emphasise the complexity of correctly applying carry-forward rules.

MONITOR YOUR TAX POSITION
Exceeding your annual or carried forward allowances has consequences. Any excess contributions are subject to a tax charge. It is your responsibility to report this to HMRC and pay the required charges through your self- assessment tax return or from the pension plan.

Considering the complexities involved, from the MPAA to implementing rules, seeking professional advice is crucial. Whether you want to optimise your contributions or understand personalised strategies, we can guide you towards making the most of your pension.

Need professional guidance with your retirement plans?
Contributing more to your pension can greatly enhance your retirement savings, but the process might seem daunting. If you require advice specific to your situation or help with HMRC rules, contact us today. Taking charge of your pension savings now can help secure your financial future.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. A pension is a long-term investment not normally accessible until age 55 (57 from april 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available.

Increasing awareness of intergenerational wealth transfer

A significant proportion of people (47%) plan to pass on their wealth to future generations, with over a third (38%) intending to transfer assets directly to their children, according to a new report[1]. However, many are unaware of how to do this in a tax-efficient way.

The increasing awareness of intergenerational wealth transfer emphasises significant changes to Inheritance Tax (IHT) announced in the 2024 Autumn Budget. Notable examples include the new IHT rules applying to defined contribution pensions from April 2027 and the introduction of caps on business and agricultural reliefs. These changes have prompted many individuals to reassess their estates.

The report’s findings reveal that over a third (36%) of people are worried about their financial future. With tax thresholds frozen and the potential for further increases, demand for professional financial advice is increasing. People are increasingly seeking to understand the implications of IHT and ways to ensure their wealth is passed on efficiently.

BONDS OFFER EFFICIENT ESTATE PLANNING TOOLS
One solution gaining popularity is the use of onshore bonds. Offering a unique blend of flexibility and tax efficiency, these investment tools enable savings to grow while helping to minimise future IHT liabilities. When incorporated into a well-designed estate planning strategy, bonds not only reduce tax exposure but also simplify the transfer of wealth across generations.

Onshore bonds are especially beneficial because they can be transferred to family members without generating a chargeable gain. The recipient is regarded as having held the bond since the start. This enables them to make the most of full top-slicing relief and any unused 5% tax-deferred allowances in future withdrawals.

TRUST STRUCTURES SUPPORT TAX MITIGATION
When used within a trust, onshore bonds offer an effective way to reduce IHT and simplify administration. Trustees can access a 5% tax-deferred withdrawal allowance when taking funds for expenses, while avoiding the complications linked to income-producing assets.

Furthermore, bonds structured as clustered policies enable trustees to allocate specific portions to beneficiaries later. This flexibility not only diminishes future tax exposure but also ensures beneficiaries receive financial support at the appropriate time, aligning with the original trust objectives.

LONG-TERM FINANCIAL PLANNING OBJECTIVES
However, despite these advantages, research indicates that more than two-thirds (67%) of people are unaware of how bonds can assist with inheritance planning or lower tax burdens. This gap in understanding underscores the crucial role that professional financial advice plays in this area.

As awareness increases, more people are aiming to equip themselves with the tools needed to leave a lasting legacy. Bonds, with their distinctive features, provide an attractive option for those seeking to combine investment growth with long-term financial planning goals.

EDUCATION AND PROFESSIONAL ADVICE ARE ESSENTIAL
Given the complexities surrounding estate planning and the legislative changes to IHT, it has become essential to seek professional advice. We can help individuals and families make well-informed decisions by guiding them through the intricate landscape of tax-efficient investment options.

Onshore bonds, in particular, can serve as a valuable tool for individuals seeking to achieve capital growth while reducing tax exposure. By incorporating bonds into a broader financial strategy, clients position themselves to benefit future generations while remaining compliant with changing tax laws.

BONDS COMBINE SIMPLICITY WITH FLEXIBILITY
One of the main appeals of bonds is their straightforwardness. Unlike other financial planning tools, they provide a transparent way to manage tax and inheritance matters. This simplicity not only makes bonds accessible to investors but also practical for trustees handling long-term wealth.

Another reason is the flexibility that bonds provide. With the ability to transfer ownership, manage withdrawals and adapt to changing circumstances, bonds can accommodate a wide range of estate planning scenarios. Ultimately, this flexibility ensures they remain a relevant and powerful tool for passing on wealth.

TAKE ACTION TO SECURE YOUR FINANCIAL LEGACY
Bonds remain a valuable and often overlooked resource for those seeking to grow their wealth while reducing Inheritance Tax. By combining tax efficiency with flexibility, they provide a practical solution to meet the increasing demand for intergenerational wealth transfer.

Want to discuss securing a tax-efficient future for generations to come?
If you’re considering your own inheritance or tax planning, don’t wait. Speak with us to find out how bonds, alongside other tools, could help you achieve your long-term financial goals. Proactive planning today can provide a more secure and tax-efficient future for future generations.

Source data:
[1] Survey of 4,000 nationally representative UK adults conducted for LV= by Opinium in March 2025.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. The value of your investments can go down as well as up, and you may get back less than you invested. Tax planning & estate planning is not regulated by the Financial Conduct Authority.

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