BACKGROUND

Ann was 61 and explained to PMN that her objective was to fully retire at 63.

She had a number of pension arrangements and had accrued capital in various investments.

Ann had the following key objectives:

• To provide an income, net of tax, of £30,000 p.a. to meet her expenditure.
• To protect her pension assets for her family under the new pension rules.

PMN'S APPROACH

• Using cash flow modelling, we tested and validated the sustainability of her income needs.
• We advised on the scope for additional pension contributions.
• We tested the value of Ann’s pension benefits against the Lifetime Allowance (LTA).
• We considered the priority order of withdrawals from her savings / pensions.
• We checked carefully as to the amount Ann needed to retain in cash for contingency purposes.

RECOMMENDATIONS

• We recommended that she make a significant lump sum pension contribution.
• This secured tax relief at 40% before her earnings fell.
• Her pension benefits were then valued at £800,000, within the current LTA (£1,073,100).
• We recommended the priority order of withdrawals over four separate (five year) stages:

• This enabled her to leave the most tax efficient wrappers to accumulate over the longest term.
• Cash was parked in a suitable deposit account now to cover the first five years.
• The pension plans can be passed to her children, free from Inheritance Tax.
• We recommended her nomination of the beneficiaries under these plans, was current.
• We designed and implemented a risk aligned portfolio within each tax wrapper.

REVIEW PROCESS

• At each review we benchmarked the results against the original cash flow forecast.
• We tested the pension values against the LTA, to determine if benefits should be taken.
• We topped up the cash reserve account, by withdrawing profits.
• We rebalanced the portfolios to ensure that they continued to reflect Ann’s risk profile.
• All meetings were comprehensively minuted.

This case study is an example only, and financial advice should always be sought before making any investment decisions. The value of investments can go down as well as up and you may get back less than the amount invested