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 (£1,030,000).
• 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.