Phil is a 55 year old divorcee. His 3 sons have all grown up and left home. Though Phil has a partner he has decided he does not want to marry again. His partner is financially independent. He is about to be made redundant by a large engineering firm. He plans to carry on working, part time, as an Engineering Consultant. This event has triggered him thinking about his medium to long term financial situation. Through his last employer he had a Group Stakeholder Pension plan, plus he was part of a Final Salary scheme for many years with a previous employer, which had a transfer value of over £700,000.
Phil lives a comfortable lifestyle and plans to partially retire from the age of 60 and wants to understand how is finances will look long term.
His greatest concern is that if he did die early, how would his family benefit from his pension plans, being aware his estate would lose his final salary benefits as he had no financial dependents to qualify to receive the extended benefit. Naturally, he would prefer an outcome which would allow him to pass on all his assets.
Occupational Transfer advice requires detailed analysis and specialist knowledge before making any assessments as to the best financial outcome. Calculating the benefit of the guaranteed increasing benefits of his Occupational Scheme against the potential benefits of transferring into another solution allied to understanding that investments can go down as well as up were a serious concern.
Taking all Phil’s circumstances and wishes into account, following a detailed assessment of the options, using our ‘Prophecy’ software we showed that getting his frozen Occupational Final Salary Scheme and his Group Pension Scheme transferred into one solution providing a great combination of creating some secure income options and added a flexible income solution. (But to be clear this is not always the case and our view from the start is that for the majority of clients we review who are looking at this option it is most likely not the right steps to take).
The key here was understanding Phil’s circumstances, not being overly influenced by passing on assets to the family, but ensuring Phil’s medium to long term income needs were addressed allied to maximising any benefits that could be passed on in the unhappy event of his premature death.
Phil liked the idea of meeting up every 6 months to discuss his long term plans. Being able to see how his plan worked now and in the future using ‘Prophecy’ gave Phil peace of mind that he was maximising his medium to long term strategy as well as having the security that his pension assets would pass on to his family should the worst happen.
Final point is that we work long and hard with clients to ensure they have the right outcome. So this is a fee based recommendation, not a fee paid through transferring the pension. This ensures if we do recommend not to transfer the client still have a fee to pay for our time, but they know we have fully looked at their situation and they have a full understanding as to what is in their best interests.
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