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Case studies.

Removing the Mist – Consolidating Pension Arrangements

Mr Stratford had accumulated a dozen personal pension plans during a career working in the city. He had long since left this life behind him as he had been running an extremely successful family business for more than 20 years.

As he approached his nominated retirement age he began to receive letters from his various providers but these policies had never been reviewed and he had little sense of what he had and certainly did not want to retire. We undertook a review of his options and consolidated most of them into one plan with a defined investment strategy, leaving in place two which offered valuable contractual guarantees. He knows that he can access his funds at any time but has no need to, and is happy to leave them invested, knowing that under the new pension regulations the funds can be passed tax efficiently to his family on his death.


Maximising Pension Contributions

Mr Warwick was a partner in a city firm with substantial earnings. He had neglected pension planning due to family commitments and a lack of confidence in the pension industry. Now, however he was in a better financial position and keen to make up for lost time.

By being able to close his “pension input period” early and to take advantage of the opportunity to carry forward unused allowance from earlier years, he was able to pay £100,000 into his pension plan. As he was a 50% taxpayer at the time, this contribution only cost him £80,000 at the point of investment and he was also able to claim a further £30,000 tax relief via selfassessment.


Inheritance Tax Planning – keeping things flexible 1

Mr & Mrs Rutland were retired in their early 60s and in a comfortable financial position. They had undertaken some inheritance tax planning at retirement but with an estate of £1.5m they still had substantial surplus capital. They were uncomfortable about gifting further money outright to their children, just in case they later needed it themselves.

After undertaking a review of their position we recommended Mrs Rutland make an investment of £250,000 into a flexible Trust. Once this gift is seven years old, the value of the investment will fall completely outside of her estate and therefore reduce the potential inheritance tax by £100,000. However if at any time, access to the capital is required, she is able to draw on a part of the investment each year and is ultimately able to recover the whole of the value of the Trust over a number of years should it be required. This is unlikely to be the case unless it is needed for spending on care or medical costs but equally, parts of the Trust can be gifted to family members at any time if that is what she chooses to do.

The Financial Conduct Authority does not regulate Trusts or Inheritance Tax Planning.


Inheritance Tax – keeping things flexible 2

Mr & Mrs Pershore: Mr Pershore was a senior executive within a global manufacturing business. Due to the success of his career he had accumulated significant pension benefits, personal investments and also acquired a substantial shareholding in a former employer.

Added to this, their home was worth £1m and this meant there would be a significant liability to inheritance tax should the worst happen to them both. However their children were still in education and Mr planned to work for a few years yet, plus they had plans to use their capital to buy a holiday home overseas. We were able to put in place a low cost whole of life policy within a trust, which would ensure that any inheritance tax bill would be settled on second death. This is not a permanent solution and it will need to be reviewed as their future plans take shape but it means they have full, unfettered access to all of their assets in the meantime without having to worry about inheritance tax.

The Financial Conduct Authority does not regulate Trusts or Inheritance Tax Planning.


The Defined Benefits dilemma

Mr Worcester was a long-serving senior executive within a large regional business. His benefits within the company final salary scheme were well in excess of what he would actually need in retirement. In addition to this, there were question marks around the long term security of the Scheme as his benefits were well above the level protected under the Pension Protection Fund. He was also concerned about his long term health and what would happen to the value of his pension if he died early and he wanted to be able to pass on value to his children.

Following careful assessment of the substantial transfer value available, the pros and cons of a secure income versus a personal pension fund where the capital is at risk and discussion of the client’s long term objectives, we recommended that he transfer to a personal pension plan. He is now able to draw flexibly on the fund whenever he needs to and can look forward to retirement knowing that however long that lasts, his remaining fund can be passed to his family. Transferring out of a final salary scheme is rarely appropriate and it is vital to take professional advice.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.


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