Mr A asked us to review his existing pension arrangements as he had five different pension plans which he had accumulated over a number of years. He was finding their management very unwieldy and time-consuming, particularly in terms of keeping track of the returns from the funds held and his likely pension benefits at retirement. However, perhaps more importantly, it was clear that there was no cohesive investment strategy in place.
Following a detailed review of these arrangements and further discussions with Mr A, we suggesting transferring three of the plans to a modern Self Invested Personal Pension (SIPP) with lower charges and access to a much wider range of investment choices. We recommended leaving the other two plans in place, as they contained important guaranteed benefits that would be lost on transferring.
As part of the review process, we discussed Mr A’s attitude to investment risk and his aims for retirement. Our investment process aims to maximise returns for a given level of risk so that our clients can be more confident of achieving their financial goals. This allowed us to arrive at the most suitable investment approach for Mr A and to select the most appropriate portfolio of investments.
In addition, using our Lifestyle Financial Planning software, we assessed our client’s likely retirement benefits and established that his current level of contributions was unlikely to provide the required level of income in retirement. We suggested using the “carry forward” rules to permit him to make a substantial lump sum payment to the new plan to bring his retirement funding back on target.
The carry forward rules allow unused pension allowances from earlier years to be utilised in the current financial year and can permit contributions, with full tax relief, well in excess of the usual annual allowance (£40,000 2014/15).
Mr A is now far happier, reassured that he has a structured plan for retirement in place with a balanced and “joined up” investment strategy. With regular annual reviews, we will be able to ensure this strategy remains on track to meet his requirements now and in the future.