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1.2 Dependent Factors
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Age. Generally, the older one gets, the more relevant and important
planning a retirement income becomes. Unfortunately, the later it
is left, the less time an investment has to grow.
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Income. Income will determine the pension target in an occupational
pension scheme, and maximum contribution into a personal pension
scheme. With a personal pension, contributions may increase with
age. With an occupational scheme, it may be possible to contribute
to an AVC or FSAVC to top up pension planning. The fundamental point,
however, is that the greater the income, the greater the potential
ability to make suitable contributions.
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Dependants will affect decisions during working life and in retirement.
Pre-retirement will be the decision on whether to provide protection
for them now or in retirement. Post retirement the decision will
be, "How best to provide for them", whether in terms of
a fixed dependant's pension or in some other fashion. In some instances,
namely personal pensions, providing dependants' pensions will reduce
the income of the planholder.
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Previous and Current Pension Arrangements will naturally have a
bearing on plans. If maximum contributions have been made to date,
or if maximum permitted pension is being funded through an occupational
scheme, careful consideration should be made of required retirement
income. This is an extreme, and unusual, situation. More often than
not, additional income will be due from one or more of the following
sources:-
- Basic State Pension.
- State Earnings Related Pension Scheme (SERPS).
- State Second Pension (S2P).
- Current occupational scheme, or
- Current Personal Pension (not usually concurrent with an
occupational pension scheme).
- Benefit earned in a previous occupational scheme, including
an in-house AVC scheme (retained benefits).
- Benefits from a previous Personal Pension.
- Benefits from an AVC or FSAVC.
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