Are you saving enough for your retirement?
The minimum annual retirement income that many people say they need to live comfortably is £10,000. To achieve this, annuity provider Just Retirement says a total pension pot of £160,000 is required.
So, how does the average pension fund compare with this amount?
Unfortunately, it does not compare very well. According to the Association of British Insurers*, the average pension pot at retirement is just £36,000, £124,000 short of what is required for a £10,000 per year income.
Of course there are ways to fund retirement other than a pension. An increasing number of people are looking at property, either through investment in buy-to-let or equity release. And, recent changes to Cash ISAs mean that since July 1 2014, up to £15,000 a year can be saved tax-free**.
Potentially these are all sensible choices and it certainly makes sense to spread your investment decisions. However, a pension remains the most tax efficient way to invest for your retirement and the most appropriate option for most people.
It can seem daunting, but if you want to enjoy your retirement, it makes sense to start thinking about your options sooner rather than later.
Remember, pension planning is a complicated area and you should seek advice from an Independent Financial Advisor (IFA) before you take any action.
Planning for retirement in line with Islamic values
Unlike most conventional pension schemes available in the UK, those which are accredited by Al Rayan Bank guarantee not to involve interest or to invest in any activity which is prohibited under Islam.
Al Rayan Bank accredits Carey Pensions to provide The Islamic Pension Trust - a Sharia compliant pension scheme that meets the criteria for automatic enrolment. Unlike conventional auto-enrolment pension schemes, the Islamic Pension Trust guarantees that no income or investment growth is obtained through the payment of interest or unethical business activities prohibited in Islam, such as pornography, gambling, speculation and tobacco.
If you'd like find out more about how to provide a Sharia compliant auto-enrolment pension scheme, please click here to request a call back.
** This is our current understanding of the cash ISA allowance. For up to date information on cash ISA allowances you can visit www.hmrc.gov.uk