Drewberry™ provide pensions, investment and insurance advice for Money to the Masses readers throughout the UK.

 

Pension Consolidation Case Study

Our Client

Mr C Study, a 50 year old employee from Surrey, had only had two job changes in his career but his current employer had merged with another company. As a consequence the employee built up numerous pension arrangements.

In addition to his pension arrangements, the client had built up and managed successfully an investment portfolio containing numerous UK shares over a 20 year period. He had also built up an ISA portfolio. He would class himself as an experienced investor, but not an expert.

Clearly, the number of pension arrangements was as a result of his employers restructuring and therefore out of his control. The pension history and details are listed below.

 

 

Pension arrangements before advice

 

Existing Pension Arrangements

Current Employer’s Pension Scheme

£15,000

Current Employers Old Pension Scheme

£55,000

Previous Employers Pension Bond (Section 32)

£25,000

Clients Own Personal Pension

£70,000

With four pension schemes in total, the client wanted to consolidate where possible. The current employer’s scheme offered a very limited range of funds and therefore felt this option did not provide him with the investment freedom he was seeking, so his other pension funds were not transferred into this scheme.

 

 

The Pension Review

Following a review of the four plans, it was recommended that he retains his previous employer’s Pension Bond (Section 32) arrangement because this plan offered Protected Tax Free Cash in excess of 25%.

The other arrangements offered a fairly comprehensive fund choice. However, the investments had not been reviewed for a number of years. As the client had turned aged 50, he wanted his investments to be actively reviewed to ensure they remain within his risk profile. A pension shortfall calculation was undertaken to enable the client to target his pension requirements to his desired retirement lifestyle.

It was recommended to the client that he consolidate his current employer’s old pension scheme and his own personal pension onto a platform, utilising a multi-asset portfolio approach that matches his risk profile.

In addition, it was recommended he transferred his ISA portfolio on to the platform, thereby enabling him to review all his investments online. The particular platform recommended offered clean share classes and therefore the charges were all explicit.

 

 

Pension arrangements after advice

 

New Arrangements

Current Employer’s Pension Scheme

The client and employer are currently contributing into this scheme. The investments funds were reviewed to meet the clients risk profile.

£15,000

Pension Funds Now On Platform

The clients old pension scheme and personal pension were consolidated. The investments funds were reviewed to meet the clients risk profile.

£125,000

Previous Employers Pension Bond (Section 32)

This pension was not consolidated given a favourable tax status. The investments funds were reviewed to meet the clients risk profile. It was also checked that the policy was written in trust for IHT purposes.

£25,000

 

Conclusion

The client’s objective was to consolidate. Mr C Study’s Pension Adviser reviewed each arrangement and provided the client with an initial appraisal. Not all pension plans were consolidated as it benefited the client keep those arrangements as they were.

In addition, the client was not aware of platform type arrangements to consolidate pensions and ISA investments. The overall charges were subsequently reduced because the platform charge is based on the total funds held.

The client is now also considering holding his share portfolio on the platform.

 

 

Need Advice?

If you are in a similar situation and require pension consolidation advice please do not hesitate to get in contact, either give us a call on 0208 432 7333 or request advice here >>

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