About to Retire

The Client

Jane is a successful professional working in the IT industry in London.
She is around 3 months away from the date at which she would like to retire but doesn't really understand all the pension benefits she has accumulated over the years, both personally and from her different employments.

She has:

A Personal Pension plan which she is still contributing to.
An old Retirement Annuity Contract.
An old Occupational Money Purchase scheme.
Final Salary and attaching Additional Voluntary Contribution (AVC) Scheme pension benefits that have been deferred with a previous employer.

She is very concerned about her Final Salary Scheme benefits, because she has been told that the scheme is to be wound up during the next 6 months, as a result of the former employer's insolvency. She has been offered the chance to transfer her money out of the scheme.
She would really like some help in understanding what this all could mean for her, what her options are and how she should take the benefits from her various pensions, to ensure the greatest value and tax-efficiency.

To assess the implications of Jane's old Final Salary pension scheme being wound up.
To analyse all of her pension plans to determine the options available to her in terms of taking the benefits.
Establish whether there are any 'hidden' benefits contained within the different pensions which could be overlooked and lost.
Decide on the most valuable and tax-efficient means of taking the benefits.

We spent time explaining and discussing the features of Jane's pension plans and the issues to be considered.
We reassured Jane that she had nothing to worry about in respect of her Final Salary Scheme pension, as 100% of its value would be protected under the 'Pension Protection Fund' scheme, which is designed to provide a lifeboat for members of failed Final Salary schemes.
We discovered that Jane was entitled to a very attractive 'Guaranteed Annuity Rate' in respect of her Retirement Annuity Contract.
We also discovered that under transitional rules, she was entitled to take a greater level of tax free cash from her old occupational scheme than would apply to newer schemes under current legislation.
We advised her that given her circumstances and objectives, Jane should simply take her income benefits from her Personal Pension in the form of 'Income Drawdown', rather than an Annuity, as this would provide her with better value for money and the flexibility of income she wanted.
We guided Jane as to the optimum way of releasing the benefits from her various plans in order to maximise tax-efficiency. This was a particularly complicated decision in relation to her Final Salary and AVC scheme benefits.

Saved Jane from giving up £5,000 of guaranteed income every year by advising her not to accept the offer of a transfer from her Final Salary scheme.
Advised Jane to maximise the tax-free cash element of her Final Salary Scheme benefits, rather than accept a higher income and to take the cash from the AVC pot, as this would provide better overall value for money.
Secured an extra £4,000 per annum for Jane through identification of the Guaranteed Annuity Rate.
Secured an additional £30,000 in tax free cash through the identification of Jane's protected entitlement.