Background
House £275,000
Investments – Building Society accounts and cash ISA’s £43,000
Pension policies: Three funds: £65,421, £38,240, £15,164
Challenges
Paul was forced to give up work because of a back problem. He had been saving into pension plans for many years. He now wished to take the benefits and was confused by the paperwork and the options given to him.
What We Did
- Paul gave us authority to contact each Insurance Company and we found out the options which were available.
- We discovered that one policy contained a very valuable guaranteed annuity rate. We explained to Paul the importance of this and that in this case he should take the benefit as a pension for life and not to take the tax free cash option.
- For the benefits from the other two policies we made a search of the market and found improved rates and suggested that Paul should exercise the open market option
- We also asked Paul to complete a form for an enhanced annuity. Because of his back problem he may have been able to obtain better rates but in this case enhanced rates were not available.
- We agreed to take a tax free cash sum from the other two policies with a pension payable for Paul’s life but continuing to Sandra if he died first.
- We helped him complete all the paperwork and we undertook all the administration involved in moving the funds and arranging payment of the cash sum and the pension into his bank
- We advised him to invest the £20,000 in cash ISA’s for him and his wife over two tax years
The Results
- Within six weeks of our first meeting, Paul had £20,000 tax free cash in the bank and a pension of £7,400 per annum in payment
- We improved the pension by at least £600 per annum
- We ensured that his wife would have the same level of income even if her husband died first
- They will receive tax free income from the lump sum investment of £600 per annum