Pension and Investment Advice

Client’s need: client who wanted pension and investment advice after thirty years full service in the Police force. The spouse, who still worked in the Police services required advice too:

A six figure lump sum was available to invest for this couple, who were both of a low / defensive risk disposition. Income in retirement and hedging against inflation were the priorities. Investment experience was limited to cash ISA’s and Final Salary pensions.

Protection needs were not a priority for this couple due to ill health of the spouse that had just retired from the Police Force and the employee benefits offered by the Police for the other spouse, who was not at retirement age.

What Financial Relationships did:
Once protection needs were ruled out our considerations focused firstly on the pension benefits to be paid to the newly retired client and a review of buying additional years in the Police scheme was undertaken as an alternative to funding a private personal pension for the spouse. A State Pension forecast was completed immediately for both individuals to confirm the additional tax free income due at 65.

Consideration was given to funding into a private pension for the newly retired spouse for tax efficiency and to boost pension income at 65.

The benefits of using full ISA allowances for both clients was explained and careful consideration was given to the advantages and disadvantages of using Cash and Stocks and Shares allowances or running a defensive strategy for the full Stocks and Shares allowance. Both options were compared with the use of an on and offshore bond.

National Savings* and Investments were explained although these were not available at the time of our advice, as they could be highly appropriate if a new tranche of monies became available.

The couple’s children had already finished education so nothing to consider there, aside from Will and Estate Planning provision*.

A review of the mortgage showed a life time tracker just over Bank Of England base rates. Paying this small mortgage off with the lump sum available was considered, but didn’t appeal to the clients as it was possible to obtain a higher rate in a deposit account even after tax.

In line with the clients’ attitude to investment risk it was decided to pursue a combination of no and low risk investment options that aimed to keep with inflation.

Client benefit:
The clients left the initial fact finding review fully aware of all of their options. Items they just hadn’t considered but were fully entitled too were brought to light with the use of tax allowances*.

Instead of taking a lump sum to invest in one go careful consideration was given to buying extra pension benefits and the use of ISA and National Savings and Investments allowances in line with the clients risk profile.

Beating inflation and keeping within a low risk profile is difficult in the current climate. A combination of tax relief on pension contributions, increasing benefits acquired within the Police pension and tax effeceint savings vehicles made this aim a possibility.

The most pleasant suprise for this couple was the amount of State Pension entitlement that they had worked so hard for serving the community and not even considered.

*Estate Planning, tax planning and National Savings products are not regulated by the Financial Services Authority.

Get in touch