Stephen had the following pension plans
Local Authority Pension – 5 years membership – retirement age 60
Executive Pension Plan – fund value £94,720 – retirement age 60
Final Salary Scheme – 10 years membership – retirement age 63
Free Standing AVC fund value £23,100
Contracted out Personal Pension – fund value £52,000
Stephen wanted help to review his existing pension arrangements.
He wanted if possible to amalgamate the pension schemes for ease of understanding and administration.
He wanted, if possible to be able to use his pension fund to help finance his new company.
Stephen wanted to understand the advantages of making pension contributions in the future.
What We Did
- We obtained information on each scheme
- We analysed the benefits, risks and charges of each scheme
- We recommended that the Local Authority Scheme and Final salary schemes should be left untouched and the benefits taken at normal retirement age
- We took benefits from the Executive Pension Scheme because it was possible for more than 25% of the fund to be taken as tax free cash
- Having undertaken a full analysis of the charges and penalties, we moved the free standing AVC and contracted out Personal Pension to a SIPP (Self invested Personal Pension) using the low charged SIPP Centre. We carried out all the administration, a risk analysis and made recommendations for the new portfolio
- We recommended that the pension in payment should be re-cycled into the SIPP and discussed the tax advantages of making further contributions when the business was established
- We set up an annual review service for the total pension fund
- Stephen received a tax free sum of £49,000 which he will use in his new business
- The pension of £2,500 per annum is being re-cycled into the new scheme, so he will pay no tax on this income
- He will have access to further tax free cash sums from his SIPP in the future.
- He has his pension fund under his control and it is being regularly reviewed