Staying on your feet

The riddle of the Sphinx asks, 'What has four legs in the morning, two in the afternoon, and three in the evening?' The answer, of course, is humankind - on all fours in infancy, on two feet through middle age, and supported by a stick in old age.

We hope you never need the support of a stick in your retirement - but you will definitely need financial support. The time to make provision for that support is now - while you are standing on your own two feet.

Pensions are one of the most tax efficient methods of saving for retirement. Besides replacing your salary or business profits, your pension offers considerable scope for tax savings:

• Your premiums can carry relief from income tax at your top rate
• Your pension grows in a fund that is exempt from UK tax
• On retirement, you can withdraw a substantial portion of your accumulated fund as a tax-free lump sum
• If it is written into trust, death benefits paid from your fund will be exempt from inheritance tax

Surprisingly, there is still a significant number of people who have not yet made adequate pension arrangements. Some, like ostriches, may be standing on two feet, but they have their heads well and truly buried in the sand.

If you have reached middle age without making adequate arrangements, you should not delay any longer. Make the most of the fact that your salary or business profits have matured, mortgage payments are nearing an end, the children have finished their education and left home, and general living costs have reduced.

It goes without saying that if you do not yet have a pension you should rectify that straightaway. The state pension, currently £90.70 a week for a single person and £145.05 for a married couple, is hopelessly inadequate, so you need to make additional arrangements.

If you are employed and have the opportunity to join an employer's scheme, this is almost certainly your best option. If you are in non-pensionable employment or are self employed, you can take out a personal pension plan.

Either way, you should ensure that you make the most of all your available reliefs and allowances.

In managing your pension, you will have to make a number of strategic decisions in areas such as:

• The suitability of fund investments and the adequacy of expected benefits
• How to make provision for long-term care in the future
• Exercising your 'open market' option to switch to a different company before drawing benefits
• How to make the most of your personal allowance(s) in retirement

The decisions you make in planning and managing your retirement strategy could be the most important investment decisions you make in your life, so you must take the best professional advice every step of the way.

With our own in-house expertise and extensive network of contacts we can point you in the right direction and help you optimise your pension strategy. Be sure to make use of this help. It is better to take advice and act now than be on your knees in your retirement.