This is a well put together guide for UK contractors to retiremnent planning.

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PA RT N E R S I N M A N AG I N G YOU R W E A LT H
A Guide to
RETIREMENT PLANNING
PA RT N E R S I N M A N AG I N G YOU R W E A LT H

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Contents
Retirement planning guide 3
Retirement – the facts 4
How much will you need in retirement? 5
Investing for your retirement 7
What are the pension rules? 8
What about SIPPs? 11
Summary 12
About St. James’s Place 14
We put our clients first 14
Focused on protecting and growing
our clients’ investments 15

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Retirement planning guide
Whether retirement is many years away or just round the corner, unless we
start planning for retirement now, there is a great danger that we could outlive
our savings.
The golden rule is to determine exactly how much you are going to need in
retirement – and to start planning for it now.
The stark reality is that the majority of us need to save more. With people
living to a greater age, retirement can now last longer than the time we spend
working.We all must accumulate more when we are earning to meet the extra
costs of living longer.The decisions we make today will dictate the standard of
living we will enjoy in retirement.
And beware the cost of delay.The earlier you make a start, the easier it will
be to create the retirement lifestyle you want.You need to commit to a plan,
and take action.
“It is better to have a permanent income
than to be fascinating.”
OscarWilde

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Retirement – the facts
In 201412.4% of the UK population were over pensionable age – and by 2039
it is projected that 16.5% will be above pensionable age*
– a 32% increase.
In 1981, UK life expectancy of a 65 year old man was 14 years. A 65 year old
man can now expect to live until 83 (18 more years).**
So, from a retirement
planning viewpoint, it means that someone retiring now will need to have
built up retirement funds significantly more than someone retiring in 1981.
The prospect of outliving savings and running out of money in retirement is
a daunting one. This could become a harsh reality if there is a lack of proper
planning, which is why it is vital to take action now before it is too late to
repair the damage.
Sources:
*The Office of National Statistics,October 2015 National Population Projections.
** The Office of National Statistics,April 2014 Life expectancy at Birth and Age 65

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PA RT N E R S I N M A N AG I N G YOU R W E A LT H
How much will you need in
retirement?
Your life in retirement is likely to be very different from your working one,
both personally and financially. You will probably have lower outgoings. Any
children will most likely have left home,and most of your long-term debts like
the mortgage will probably have been cleared.
You do need to take into account,however,that you might want to spend more
on leisure activities like holidays, travelling and hobbies.And you may choose
semi-retirement, maintaining some level of employment while you are still
happy to work.
Itisthereforeclearthatmakingacalculationforyourretirementfundisentirely
personal, however below are some examples that may prove instructive.
Let’s assume you are 40 and you want an annual retirement income of £30,000
when you retire at 65. As a rule of thumb you should apply a multiple of 25
to the £30,000, and consequently you are going to need a retirement fund of
£750,000 to help achieve the desired level of income in retirement.
When you work out how much income you need in retirement, remember to
allow for inflation.

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PA RT N E R S I N M A N AG I N G YOU R W E A LT H
The longer you leave it to take action, the more expensive it will be to catch
up.Take the following example.Assume you start saving for retirement at the
age of 40, and invest £500 a month gross of tax relief and increasing each year
in line with average earnings.
If you delayed by five years, and started at the age of 45 instead, you would
need to invest 43% more a month.
These figures assume a retirement age of 65 and are for illustration purposes
only. They are examples and are not guaranteed and are not minimum or
maximum amounts.What you get back will depend on how your investment
grows and the tax treatment of the investment. You could get back more
or less than this.

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PA RT N E R S I N M A N AG I N G YOU R W E A LT H
Investing for your retirement
Pensions have a unique advantage when it comes to investing for your
retirement, thanks to the availability of tax relief and the ability to obtain it by
contributing up to 100% of your earnings or £40,000 – whichever is lower.
Personal contributions are payable net of basic rate tax of 20% and relievable
up to the additional higher rate of 45% (2016/17). So if a member pays a
contribution of £32,000 net of basic rate tax, the scheme will invest £40,000.
Assuming that 40% higher rate relief is available on the whole contribution,
the real cost of the contribution will be reduced by a further 20%, or £8,000
in the example, to £24,000. The additional 20% of tax relief is obtained by
submitting a self-assessment tax return.
Please note that the tax treatment of pensions may be subject to change in the
future.The levels and bases of taxation and reliefs from taxation can change at
any time and are dependent on individual circumstances.

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What are the pension rules?
The main rules are:
• A lifetime allowance of £1million (2016/17).Any fund in excess of this
allowance will be taxed at the point when benefits are taken, at a rate
of 55% on the excess of the fund over the lifetime allowance when
taken as a lump sum. It may be possible to protect funds which were
larger than £1 million at the start of the 2016/17 tax year.
• For most people tax relief on personal contributions is only available
on 100% of earnings with a maximum‘Annual Allowance’ of £40,000
per annum.
• From 6April 2016 anyone with total income from all sources above
£150,000 will see their annual allowance reduced by £1 for every £2 of
income above £150,000. The maximum reduction is £30,000 – reached
if your income is at least £210,000 – which would result in an allowance
of £10,000.
• There may exist additional opportunities for greater levels of funding
utilising Carry Forward provisions.
• The minimum retirement age is 55.
• 25% of your fund can be taken as a tax-free cash sum.
It is possible to take benefits from age 55 without ceasing employment. This
dramatically alters the options available to you.
You do not need to purchase an annuity, so you may prefer or find it
appropriate to take a lump sum and draw an income directly from your fund.

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Retirement is an extremely important time; it is vital that you consider all of
the available options and take professional advice.
Taking an income from the fund will reduce the size of your pension fund and
the investment growth may not be sufficient to maintain the level of income
you wish to draw. If you withdraw money at a rate greater than the growth
achieved by your investments, your remaining fund will reduce in value. The
level of income you take will need to be reviewed if the fund becomes too
small – this is more likely the higher the level of income you take.
The income you receive may be lower than the amount you could receive from
an annuity, depending on the performance of your investments.

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PA RT N E R S I N M A N AG I N G YOU R W E A LT H
What about SIPPs?
SIPPs, (Self Invested Pension Plans) give a much greater range of investment
options than those available through most traditional pension plans.Investment
is allowed in a host of areas, including equities, stocks and shares, unit trusts,
OEICs, gilts and commercial property.
This flexibility allows you to spread the risk of investments performing badly,
and the investment growth is free from all UK personal income and Capital
Gains Taxes. But in order to maximise the benefits of the wider investment
choice on offer, active management is essential. However, the higher charges
associated with this type or arrangement means that it will only be suitable
for those able to fully utilize the benefits the SIPP provides.

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Summary
Retirement planning presents numerous fresh opportunities and it is never
too late to look at your current pension provision to determine how best to
take advantage of them.
One of the key requirements is to keep making full use of your personal
contribution limits. Keep monitoring and reviewing the size of your fund, and
review your attitude to risk – and as retirement nears, consider the best way
to draw your benefits.
No one likes to face up to the fact that they are getting older and that retirement
is fast approaching. Many people have been trying other ways of generating
income for retirement – buy-to-let, downsizing, investments like ISAs – yet
it remains clear that not enough people in the UK are putting sufficient sums
away to secure an adequate retirement income.
Over the past few years, retirement planning has not been at the forefront
of everybody’s minds particularly with changing market conditions and the
introduction of auto enrolment responsibilities.
If you have not sought professional advice beforehand, it is essential you do
so now.

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About St. James’s Place
St. James’s Place Wealth Management is a leading company in the expanding
wealth management market. We are a FTSE 100 business with funds under
management amounting to over £58 billion.
We specialise in meeting the financial needs of people who have created significant
capital, or who earn higher incomes, and whose circumstances are therefore
more complicated than most.
We put our clients first
Our advisers, members of the St. James’s Place Partnership, build
relationships with clients that last. All our advice is face-to-face and focused
on the personal needs of each individual client as we recognise that no one
client’s objectives or circumstances are the same as another. This approach,
combined with the average of 18 years’experience of our advisers,ensures the
relationships we build are founded on trust.

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Focused on protecting and growing
our clients’ investments
We do not employ in-house fund managers because we believe that no single
fund management house has a monopoly of investment expertise.We therefore
carefully select a number of external managers to manage our range of funds.
The cornerstone of this approach is the Investment Committee who ‘manage
the fund managers’ on behalf of our clients and are assisted by Stamford
Associates, Redington and other independent consultants. This approach
gives us both the flexibility to respond to market conditions as they change
and also the certainty that we are employing some of the best fund managers
for our clients.
In other areas such as pensions, life assurance, trusts*
and estate planning, we
have carefully selected products and services from other providers, which we
believe represent the‘best of breed’ in their respective categories.
The value of an investment with St.James’s Place will be directly linked to the performance
of the funds you select and the value can therefore go down as well as up.You may get
back less than you invested.
*Trusts are not regulated by the Financial Conduct Authority or the Prudential
Regulatory Authority.

16. Winner
SJP2314P-VR13 (04/16)
The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe
St. James’s Place representatives. Members of the St. James’s Place Partnership represent St. James’s Place
Wealth Management plc, which is authorised and regulated by the Financial Conduct Authority.
St. James’s Place UK plc is authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority.
St. James’s Place UK plc Registered Office: St. James’s Place House, 1 Tetbury Road, Cirencester, Gloucestershire,
GL7 1FP, United Kingdom.Registered in England Number 2628062.
www.sjp.co.uk
All information correct as at April 2016.