Pension Advice & Retirement Planning

George Osborne started a pensions revolution in late 2014, opening up a wealth of new options and having a profound impact on the way people use their pension savings in retirement. Rules and tax treatment changes to personal pension accounts in retirement came into effect in April 2015, making them considerably more attractive.

These changes simultaneously rang the death knell for annuities. Over the past twenty years, annuity costs have soared as risk-free investment returns have fallen and life expectancy has risen. Annuities are an inflexible and irreversible retirement product that lock in current interest rates and lock out further investment opportunity or access to capital.

Not only are they expensive but they look increasingly outdated for modern retirement, which can extend over 25 years with periods of very different income and capital requirements. Even when rates were more attractive, annuities were never popular primarily because of the implicit gamble they represent. Those who die young do badly and end up subsidising those who live longer. Annuities are ultimately worthless to the next generation.

It is not surprising that within months of the legislative changes being announced, annuity sales collapsed. Swathes of people are using the new rules and using pension drawdowns to access their pension savings in retirement.

According to the HM Revenue & Customes (April 17), a total of £10 billion in pension assets had been withdrawn and the Association of British Insurers stated that annuity purchases have fallen by approximately 62%. The Association estimates that this trend will continue as people begin to more fully understand the options available to them.

The Pension Plannning overview

It is important to note that our approach when reviewing when reviewing pension transfer case involving 'Defined Benefit' schemes (also known as 'Final Salary'schemes) is to to start with the presumption that,in most cases,transferring away from the 'Defined Benefit' scheme is not in the individual's best interest.

To briefly explain the rationale behind our stance,it is important to understand the basic difference between 'Defined Benefit' ('Final Salary' scheme) and 'Defined Contribution'scheme (Money Purchase scheme) and how benefits are funded.

With a 'Defined Benefit'scheme the pension income the indivdual receives at retirement is based on the number of years'service and,in most cases,their 'Final Salary'with the employer.

Typically,this type of scheme providers benefit to the Individual (current or formar employees) based upon lenghth (years,months and days) of service.The main benefit of these types of scheme is that the pension available to the individual at retirement can be pre-determined(subject to various increases due to inflation) irrespective of how the financial markets performing.This is because the pension paid is not dependent on investment growth as it is a promise from the sponsoring employer.

While 'Defined Benefit' schemes can be transferred into another employers 'Defined Benefit' scheme,more commonly in the private sector,transfers from an existing scheme will typically be placed into an alternative arrangemnent-a 'Defined Contribrtion'scheme(also known as Money Purchase schemes).

With 'Defined Contribution'arrangements,the benefit payable at retirement are based on the amount of money paid into the scheme,how well the investments perform and,when the benefits are drawn via 'income withdrawal',whether the pensionand the underlying investments can sustain income for the remainder of your life.As such,the pensionpaid is heavily dependent on investment growth as there is no promise or guarantee to pay a minimum level.

Where an individual is looking to secure income in retirement,the benefits payable will depend on several factors,for example,the fund size along with annuity and interest rates at the date of retiremet.

Alternatively,where a flexible income strategy is required,it will be reliant on fund size at retirement,the level of income required at various life sages and the performance of the investments within agreed risk parameters. These factors mean that the certainty or guarantee availablke with 'Defined Benefit' scheme in regards to pension income is lost once the benefits have been transferred away.

It is important to note that a transfer,once completed,cannot be reversed.

As such,based on the above,we would not reccommed a transfer unless we can demonstrate,taking all relevant factors into consideration,that it is in an individual's best interest to do so.

There is a set timescale for transfers and this runs from the day the transfer is provided,the timescale is 90 days,if the offer is not transfered within this timescale a recalculation is required by the scheme with additional charges payable to the trustees.

*We do work within these timescales however we provide no guarantee that this can be completed within the timscale due to circumstances outwith out control.

Have your pension reviewed now, we offer the following services;

  • Occuptional Pension Review Service
  • Personal Pension Review
  • Pension Freedom and options available
  • Succession Planning within Pension Planning

Financial Guides

January/February 2018 Magazine

January/February 2018 Magazine

ISA Returns of the Year: Taking control over where your money is invested tax-efficiently



A Guide to Estate Preservation

A Guide to Estate Preservation

Passing on your wealth in the most tax-efficient way.


News + Media

Die poor or Plan ahead ?

Sunday July 16, 2017

Most people are quite surprised to discover just how much they are worth. How often have you heard someone say, “I’m worth more dead than alive”? Britons will pay almost £2 billion more in inheritance tax over the next five years than previously thought, official estimates have revealed. It will rise from an estimated £4.7 …


Further reduction in Lifetime Allowance or Annual Allowance on the cards?

Monday July 10, 2017

      I wrote in March 2016 the then chancellor George Osborne may consider further reduction in the lifetime allowance (LTA) however he decided to leave this at the current level of £1m, for the time being, growing numbers of worker’s risk tax shocks because they are unknowingly on course to exceed this limit. …


Can you read the future?

Saturday July 01, 2017

Investing is about the long game however are people getting nervous as stock markets in the US and UK bump around their all-time highs. Newspaper reports are beginning to speculate that a correction may be around the corner. The biggest danger isn’t the correction or a bear market, its being out of the market on …


Tapering of annual allowance for high incomes – adjusted and threshold incomes

Wednesday May 31, 2017

This measure restricts pension tax relief by introducing a tapered reduction in the amount of the annual allowance for individuals with an adjusted income of over £150,000 and a threshold income over £110,000. Key facts The annual allowance will be reduced for individuals who have ‘adjusted income’ over £150,000 a year. The reduction in the …



© 2018 AAC • all rights reserved • Site powered by Zostro

Registered in Scotland SC362302 Advanced Asset Consultants Ltd. is authorised and regulated by the Financial Conduct Authority FCA Registration No: 506551 The Financial Conduct Authority does not regulate National Savings or some forms of mortgage, tax planning, taxation and trust advice, offshore investments or school fees planning.

The information contained within this site is subject to the UK regulatory regime and is therefore targeted primarily at consumers based in the UK. This website is designed to provide you with general information only and does not attempt to give you advice on any particular investment or to recommend any particular investment to you. If you have any doubt as to whether a particular investment is suitable for you, you should contact Advanced Asset Consultants Limited on 0141 331 2434.

eia uksif AAC