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Case Studies – Pre-Retirement

Pension Consolidation

Several different pensions, no clear idea of what they will provide and when, and no recent reviews to ensure that they are still invested appropriately…

We have helped many clients who have accrued a number of pensions over the years, often from different employments. Usually they are frustrated at the volume of paperwork from the various providers, all in varying formats, making it difficult to understand what the pensions are likely to provide in the future. Keeping on top of these plans, ensuring that they are invested appropriately and that records are maintained with the providers is quite a burden, so consolidating all the various plans into one can be a very welcome solution.

The following is an example of pension consolidation for one of our clients (all names have been changed).

John works for a Motor Sport team, he leads a busy life and his work frequently takes him out of the country. He had received no advice or support regarding his pensions for a while, but now at age 40 he wanted to gain a better understanding of his financial position, including how his pensions are invested and what he needs to do to achieve his desired income in retirement (at age 65). His ideal outcome was for all of his pensions to be in once place. The 3 pension plans were as follows:

1 ) Group Personal Pension Plan with Provider A – the fund and transfer value was £34,000
2 ) Personal Pension Plan with Provider B – the fund and transfer value was £26,500
3 ) Group Personal Pension Plan with Provider C – this is the pension that John is currently paying into – with a current fund value of £12,000

Once we had conducted a full review of the three pensions, our advice for this client was to transfer pensions 1 and 2 into the current pension 3.

There were several benefits in doing this – some cost savings, a coherent and appropriate investment strategy moving forward, a good understanding of how much he needs to increase his contributions in order to try and achieve the income he desires in retirement and also the ability for him to view his plan online wherever he is in the world.

It’s not always appropriate to consolidate as some pensions can carry additional benefits which would be lost upon transfer – but we will tell you if this is the case – and our recommendation may be to keep an existing plan in place. In our experience, consolidated plans often have lower charges, offer more flexibility and choice and of course we provide ongoing advice. You also get a clearer picture of what you might receive in the future, which helps with planning for your retirement.

IMPORTANT NOTES:

• Past Performance is not necessarily a guide to future returns,
• Pension charges could change in the future,
• Taxation and legislation could change in the future.

This case study gives an indication of how we have helped our client, however every client and their situation is different and we would always recommend that you seek advice if some of the points made are characteristic of your own circumstances. JJFS accepts no responsibility for action taken based solely on the content of this case study.


Taking an income from your Pension

Reaching retirement, with several pensions, wanting to ensure that the benefits are drawn and maximised as efficiently as possible….

When we work with clients for a number of years prior to their retirement, we have the benefit of planning in advance so there are no surprises. But we are frequently approached by individuals already reaching retirement age, wanting to know how best to take their pension(s). There are many areas in which we can provide guidance and assistance to improve the retirement income received.

The following is an example where we helped a client with her retirement benefits (names have been changed). 

Sarah was referred to us by her accountant as her previous advisor had retired. She was approaching age 65, looking to retire from her senior position with a London Architects Practice with a Self-Invested Personal Pension (SIPP) – the result of an earlier consolidation exercise – and other investment pots (including a rental property) accrued over the years with the view of providing a tax efficient income in retirement. 

She was aware that she could receive 25% of her pension fund as a tax free lump sum, and the rest of the pot could then provide an income, but after some discussion it was clear she didn’t immediately need the whole £100,000 that her £400,000 pension pot would provide.

Once we had explored her circumstances taking into account her other retirement income (including the rental property income) and considered the options available in detail, we concluded that ‘phased drawdown’ would be suitable for Sarah. 

Phased Drawdown enables you to access your pension in stages without having to take the full 25% tax free lump sum at outset, (click for more information about Phased Drawdown).

There were several benefits of doing this – a tax efficient income, flexibility for Sarah to vary her income amount, and improved death benefits for her financially dependent children.

The size of the pension pot(s) available will generally determine the options that are likely to be appropriate. Some involve more investment risk and would typically only be suitable for those with larger pots. Our approach is to go through your circumstances and your available pensions and come up with a solution that suits your particular needs.

IMPORTANT NOTES:

• Past Performance is not necessarily a guide to future returns,
• Pension charges could change in the future,
• Taxation and legislation could change in the future.

This case study gives an indication of how we have helped our client, however every client and their situation is different and we would always recommend that you seek advice if some of the points made are characteristic of your own circumstances. JJFS accepts no responsibility for action taken based solely on the content of this case study.


Investing a lump sum and planning for the future

Inheriting or acquiring a lump sum which needs to be invested for the future, and wanting to ensure this is done in the most appropriate and efficient way…..

Different stages of our client’s lives can present occasions for suddenly having a lump sum to invest. Some of our clients have received a substantial inheritance and others have perhaps sold a property. Often there is no immediate need for the funds, but instead a clear strategy taking into account existing investments and pensions is sought, in order to help build for the future.

Our approach is to understand your circumstances, consider what you are already doing and come up with a solution that suits your individual needs.

The following is a case study of an example client we helped (names have been changed)

Chris, 58, and Managing Director of a small engineering company, had been a client of JJFS for several years. His mother passed away and once her affairs were finalised Chris received the sum of £150,000. With our ongoing advice and support, Chris had been planning effectively for his eventual retirement for many years, with various pensions and investments.

This additional £150,000 was certainly going to enhance Chris’s financial plan, and whilst the thought of passing a reasonable amount of this on to his 2 adult children had crossed his mind (to try and reduce his inheritance tax position) he ultimately felt that he needed to be certain that his and his wife’s future looked secure first.

He has been paying maximum contributions into his pension for the last couple of years via his business as profits have allowed, and also using his ISA allowance each tax year. His wife has also been using her ISA allowance. 

We recommended an appropriate investment solution for this additional sum (an Investment Bond on this occasion), taking into account his other investments, the length of time he has until needing access to the money, and also the ongoing regular savings he continues to make – and in fact were able to address his objective of helping his children too by demonstrating that gifting a regular, smaller amount to them would still hopefully result in his own goals being achievable. 

The benefits of this were in specifically investing the sum in question in a well-diversified, tax efficient way but also in addressing one of his wider financial goals, i.e. continuing to support his children whilst he is still around to see it!

IMPORTANT NOTES:

• Past Performance is not necessarily a guide to future returns,
• Pension charges could change in the future,
• Taxation and legislation could change in the future.

This case study gives an indication of how we have helped our client, however every client and their situation is different and we would always recommend that you seek advice if some of the points made are characteristic of your own circumstances. JJFS accepts no responsibility for action taken based solely on the content of this case study.

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