Planning for your retirement is tricky at the best of times, but there are plenty of changes to prepare for in the coming years.
From April 2029, a new £2,000 a year cap on National Insurance relief will apply to the amount you contribute into a workplace pension through salary sacrifice. This will likely mean higher National Insurance costs once the cap starts.
Meanwhile, from April 2027, pensions are due to be included in inheritance tax calculations. This doesn’t include death in service payments paid through a pension scheme though, or a dependant’s scheme pension payable from defined benefit schemes or some defined contribution schemes. There will also be a spouse or civil partner exception.
All of this creates extra considerations for retirement and inheritance tax planning. You need to ensure you have enough to live on during your golden years, plus many people will also want to leave money behind to support their loved ones – without landing them with an unexpected tax bill.
Legacy and retirement planning can be complicated but HSBC UK has tools and financial advisers on hand who can help develop a strategy to support your investment journey. This will help support your financial assets and ultimately your loved ones in the future.
Keep reading for legacy planning factors to consider.
Preparing for retirement
Stopping work and spending your time doing things you enjoy may sound like a dream, but there will still be bills to pay.
The typical cost of a comfortable retirement is £43,900 a year, according to Pensions UK. This figure incorporates luxuries like a fortnight’s holiday abroad, beauty treatments and theatre trips, but excludes any housing costs due to many retirees being mortgage-free. However, the state pension for 2026/27 is currently £12,547 a year, so you will need additional income to supplement this if you’re seeking a similar lifestyle.
You can avoid a financial shock by preparing before you retire. HSBC UK has a handy retirement calculator that can help you understand how much you’ll need when you retire based on your current lifestyle. This could help you work out how much more you may need to put aside either through a pension, ISA or other investments.
HSBC UK can also help with investment strategies for your retirement, exploring options such as drawdown and annuities. When it comes to retirement planning, HSBC UK’s financial advisers can help and will be able to highlight the pros and cons of each scenario.
Inheritance tax planning
Another important factor when it comes to retirement planning is to consider if you want to give or leave money to your loved ones. There are options available to everyone that could help protect your wealth for your intended recipients.
HSBC UK’s financial advisers can help explain these in more detail, to see if these are right for your scenario. Some examples are:
- There are some tax allowances that could help. For example, assets can be passed between spouses tax free, and there is also a £325,000 inheritance tax nil rate band and a £175,000 residence nil rate band for a property owned and lived in before any tax needs to be paid. It’s worth knowing that the residence nil rate band is only available where the home is left to direct descendants, which includes children, grandchildren, stepchildren, adopted children and foster children.
- You can also give money or assets – known as gifts – to your loved ones while you are alive and there will be no tax to pay as long as you then live for another seven years. Some gifts from income will be immediately exempt from inheritance tax, and Gov.uk has more information about thresholds, rules and allowances.
Terms and conditions: HSBC UK’s financial advisers can offer help to support you with planning your retirement. Minimum £100,000 in investments or savings is required to qualify for the Financial Advice service. HSBC UK current account customers with online or mobile banking only. Other eligibility criteria and fees apply.
HSBC UK offers restricted advice on a range of recommended investment and insurance products, hand-picked from selected providers, including HSBC. Tax benefits are based on your individual circumstances and are subject to change.