Retirement Planning case study
The People
AB, a 53 year old married marketing executive with 3 children. He had recently been offered a new position as head of marketing for a new IT company.
The problem
AB’s flexible benefits package included an employer pension contribution into a pension plan of his choice.
AB sought advice on the most appropriate plan.
He was also concerned about:
- his overall pension provision
- the number of different pension plans that he had accumulated during his career
- the overall value of his plans
- his options available on his retirement
- adding contributions to his pension to improve his pension fund.
The Solution
We undertook a full review of all the plans. We established the value, and reviewed the charges and performance, of all the plans.
This showed that many of his existing pension arrangements:
- were expensive; and
- offered limited investment and benefit choices.
We recommended a consolidation of some of the existing plans into a new pension arrangement and advised AB on a suitable investment strategy. The cost saving amounted to over 1% per year in management charges.
Using our pension profiling system, we also provided AB with a meaningful projection of all his pension arrangements including his state pension benefits.
We arranged for AB to use the new pension as the vehicle for his employer’s contributions. We suggested that if he wanted to make personal contributions he should elect to sacrifice part of his salary forcing his employer to make additional contributions. We negotiated the terms of the sacrifice with his new employer. This significantly improved the tax efficiency of his personal contributions. AB received the equivalent of 56% tax relief instead of the standard 40% for a higher rate tax payer.
Who to contact
Philip Kingscott
Senior consultant
Email
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