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Gareth Davies, Specialist Business Development Manager, Scottish Widows.
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.*
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.
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.
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.