Pensions and Retirement

Pensions and Retirement

Outside the family home, your pensions can be one of your biggest assets. Despite this, at Heritage we know they are often misunderstood and many people do not know how much they need to retire.  

In 2021, the Retirement Living Standards study found for varying degrees of standard of living in retirement, a single person and a couple in retirement would need the following levels of income:


Minimum Retirement  

Moderate Retirement  

Comfortable Retirement

Single Person








Source: Retirement Living Standards

How our X pension advisers can help

Our reports are extremely competitive at a cost of £800 + VAT. Should you require a report with various retirement dates, this will increase to £1,000 + V

One of our independent pension advisers can work with you to ascertain how much you need in retirement.   

Using cashflow modelling software, we can model various scenarios to give us an idea:

  • If you are saving enough  
  • When you can retire
  • If you will run out of money in retirement
  • If you are on track to reach your intended lifestyle in retirement  

Whether you have ‘Final Salary’ pensions, auto enrollment pension with your previous employers, a Self Invested Personal Pension or investment properties, we can build this into our planning to calculate your expected retirement income.  


Once you have submitted a letter of instruction, before we commence any work, we will confirm the exact cost of the report.

What we can do

If you have several old pensions, we can review each of them and if it is appropriate and in your best interest, we can consolidate them into one plan to ensure you have one consistent investment strategy and potential retirement income stream.

When reviewing your pensions, it is important to know:

  • Charges – it is important to know the cost of your plans as this can eat into your investment returns.
  • Performance – Have your pensions been performing well and in line with their benchmarks.
  • Risk Management – Are your pensions invested in line with your Attitude to Risk.
  • Retirement Options – do your pensions allow you to take your pension flexibly or are your restricted to an annuity?

Frequently Asked Questions

A final salary or Defined Benefit pension is a pension which will pay you a guaranteed income for life. As such, there is no investment risk as this is born by the scheme. The amount of income is based on your length of service and final salary or Career Average earnings.  

Final Salary schemes are rarer these days as the sponsoring employer has closed the scheme as they can be expensive to run.  

Money purchase pension on the other hand are pensions in which the value is based on the contributions and investment performance. The aim of a money purchase pension is to build up a retirement fund from which you can derive an income or lump sums from. As the funds are invested, they carry a degree of investment risk.   

If you are unsure of your options, speak to one of our independent pension advisers.   

An annuity is where you use all or some of your pension pot to purchase an income that is typically for life but can be for a set number of years. This is usually purchased from an insurance company.

Although the level income may increase with inflation, the amount is rigid in that you cannot increase or decrease it in future years.  

Once you purchase an annuity, the decision is irreversible and should you die prematurely, you may get back less than you bought it for.

Annuities can be suitable for those who are risk averse and do not like to see their investments/pensions fluctuate in value.

Unlike an annuity where the whole fund value is used to purchase an annuity, Flexi Access Drawdown allows you to leave the funds invested whilst you only take a certain amount as income.

With this option you can take as much or as little income as you like from your pension.  

Although this gives savers much more flexibility in how you can take your pension benefits, the risk is that you take too much income which can reduce your pension fund. If the investment performance is poor, this can also affect the sustainability of the withdrawals from the pension fund.  

In most cases, 25% of your pension fund is tax free, with the remaining 75% classed as taxable income which is taxed at your marginal rate of income tax. The 25% tax free cash does not have to be taken in one lump sum, it can be taken in several lump sums or even as an income.  

If you have purchased a lifetime annuity, then the income and pension will die with you.

However, you can include a dependents pension guarantee which will result in your spouse receiving a percentage of your pension which is usually around 50-60%. By including this amount from the outset, this guarantee can reduce the income.  

However, if you have not yet taken a pension or are in drawdown, then the remaining pension fund can be passed to whoever you nominate.

If you die before age 75, they can inherit the pension fund and any income they take will be tax free. If it is after 75, they can still inherit the pension fund, but it will be taxable at their rate of income tax.

If you would like more information on the death benefits of your pension, please speak to one of our pension advisers in X.

One of the biggest advantages of saving into a pension for retirement is ‘tax relief’ that is awarded by the government.  This is to encourage you to save for retirement and is similar to a ‘bonus’ that is awarded to your pension contributions.

You receive tax relief at your highest rate of income tax relief. For example, if you are a Basic Rate tax payer, you would receive 20% tax relief. Every pound paid into a pension would turn into £1.25.  

If you are a higher earner, the relief is even more attractive. A Higher Rate tax payer would receive tax relief of 40%. For a Higher Rate taxpayer to make a pension contribution of £100, this would only  cost you £60.  

Basic Rate relief of £20 would be automatically added to the contribution and you could claim the remaining 20% on your self assessment tax return.  

If you would like some pension advice on making additional pension contributions, speak to one of our pension advisers.   

Although there is no limit on the amount you can put into a pension, there is a limit on the amount of your contributions that will receive tax relief.

This amount is the lower of £40,000 a year or your ‘relevant earnings’.

For example, if you earn a salary of £30,000 per annum, you would only be entitled to tax relief on the £30,000.

If you have no relevant earnings, you can still contribute up to £3,600 and receive tax relief on the full amount.