Retirement Wealth Management

Clients who own a family business recently asked us to conduct a review of their financial affairs, ahead of their proposed retirement.

Initial discussions revealed a number of objectives including;

  • Identifying the best options on the husband’s pension plans,
  • Providing income from their savings in retirement, 
  • Planning for Inheritance Tax.

After conducting a thorough review, we recommended that the client take advantage of profits within the company to make one final contribution to boost his pension fund. We noted that guaranteed annuity rates applied on an older part of his pension fund. These were limited to single life rates, which was an issue, as the spouse only had a state pension. We were able to negotiate with the insurers to see what joint life rates could be achieved. We were pleasantly surprised at the limited reduction in the guaranteed rates, when providing a spouses pension.

As the client was risk averse in respect of his pension benefits, we recommended a joint life annuity for the remainder of their pension benefits, bought from the most competitive provider, using the open market option.

Having secured the clients pension income, we reviewed their savings and investments. We were able to make use of the spouse’s lower tax rate by sheltering a significant part of their savings in her name, as well as ensuring that ISA allowances were utilised.

A review of their underlying investment funds indicated that some of them were performing very poorly, so we designed a portfolio aimed at giving more robust returns, providing a combination of income and capital growth.

We reveiwed their Wills, too, suggesting, amongst other things, that these were re-drafted to deal with shares in the business separately. It was also apparent that they were not currently in a position to gift significant sums to reduce Inheritance Tax, so we simply insured them for their current Inheritance tax liability, in the short term, to be reviewed regularly and until such time as they can consider gifting.

They will continue to draw dividends from the business, but the salaries have now been given up in favour of the younger generation, which in turn has helped them boost their standard of living.