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Pension/Investment

18 September 2014

Mr X was coming up to a major financial decision regarding his retirement planning. He came to us for advice on both his retirement and investment portfolios to see what would be the best way forward for both himself and his family.

Mr X has been contributing to his retirement plans for 30 years and is still paying into them. Currently, he is a 40% taxpayer but will be a 20% taxpayer when he retires. He is looking to finish work in the next 12 months.

Although he has been very pleased with the overall performance of his funds, he feels that now is the time to look at ways of locking in this growth so he can plan his retirement with a greater degree of certainty.

He also wanted a full de-brief on the changes to the pension industry that were outlined in the 2014 Budget as well as the changes to ISA limits and how these would affect any recommendation/decision moving forward. He has funds invested in investments such as ISAs and likes the idea of both the tax efficiency and flexibility of these types of investments if he should need additional income in the future.

We gave Mr X a full de-brief of the potential changes regarding personal pensions, including accessibility. We also advised on the potential tax implications as well as the ISA limit changes and the way in which you can pay into ISAs such as cash or investment.

It was also decided to switch a percentage of Mr X’s pension plan from investment funds to a cash fund for the short term. This would allow him to plan with more certainty with this part of his retirement plan. In the meantime, he can continue to pay into this plan as the contributions still attract 40% tax relief. Then, when the time comes for him to finish work, he can make a decision about the remainder of his plan.

With regard to his existing Investment portfolio it was decided to keep these invested in the same funds and to look at adding to this portfolio as and when he could. He would also have the added benefit of being able to generate additional income if needed from an extremely tax-efficient product.

Mr X was very happy with the advice and as a result he feels more comfortable with the changes that are happening and how they can be incorporated into his retirement plan. He welcomed the idea of de-risking a proportion of his retirement pot so that he had certainty of how much this particular pot would be worth, as well as locking in the growth that he has accumulated over the years. Finally he liked the idea of having an increased allowance regarding his ISAs, which he would look to maximise if possible, as this gave him flexibility regarding investment growth or income if needed.

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