Download pension review - Anders Bayley Scott Ltd

Service:
PENSION REVIEW
What we do:
We review the costs and benefits of clients’ existing pensions to see if a better pension can be
achieved through transfer or consolidation.
Example:
I was recently approached by Alan, a busy Management Consultant who had just moved
employer and was being offered membership of his eighth pension scheme.
He wondered if he should join his new firm’s scheme as his role tended to last only a few years
and was concerned about accumulating yet another scheme. He also wondered what to do about
the existing plans, which generated a lot of paperwork and he was concerned that he might be
paying high charges but had heard that there could be heavy penalties on transfer.
On checking his new firm’s scheme, we confirmed that he should join as the Company would
contribute 10% of his gross salary, which would not be taxed as a benefit in kind.
We also obtained full details of his existing pensions, all of short duration but which collectively
were valued over £150,000. None of the plans included valuable guaranteed pensions greater
than those currently available, nor were there any transfer penalties.
One policy was invested in a With Profits fund on which a 10% market value adjustment (MVA)
applied. The fund had performed poorly and, on investigating the asset mix, it was clear there
was little prospect of improvement. On discussion, we agreed to monitor the plan to see if the
MVA reduced but to review the position again at the next bonus announcement.
From the illustrations and details obtained, it was clear that the charges on several of the other
plans were greater than can now be obtained and yet the investment performance was
disappointing, with few alternative options. We agreed that these should be transferred and
consolidated in one plan so as to achieve lower charges with a wide range of investment funds.
Alan also had a final salary pension from a former employer. Although the transfer value was
insufficient to match the maximum scheme benefits at 65, the death benefits were lacking and
Alan planned to retire at 60 when the guarantees would be severely reduced. Given the limited
funding position of the scheme, the modest protection available and the poor financial status of
the Company, which we discussed at length, he agreed to transfer this too.
We also spoke to Alan about his death benefits and arranged for his solicitor to draw up a pilot
trust into which these could be paid, potentially saving his family a huge amount of IHT.
TL