Why did Chris approach us?
Chris was 10 years away from when he thought he wanted to retire.
During his life he’d had several different jobs and consequently accumulated five different pensions into which he and his employer had contributed.
It’s fair to say that Chris had simply ‘gone with the flow’; joining a different workplace pension every time he changed job. He made the required contributions, but didn’t pay much attention to what he would get when the time came to retire. That meant there was no investment strategy and Chris had no clear idea what income he could potentially expect in retirement.
Now, 10 short years away from finishing work, it was time to get serious.
Chris felt the best way to do this was have his existing pensions reviewed, so he could understand what was needed to get his retirement plans on track.
What did we do?
We started by getting to know Chris and understanding what retirement looked like for him:
- When did he want to retire?
- What did he want to do in retirement?
- What income would he need? Were any lump sums of money needed?
Once we knew the answers to these questions, we then conducted a review of his existing pensions. A full explanation of the new Pension Freedom rules was given, so Chris better understood the options he would have (assuming no changes to legislation) when the time came to retire.
Following the review, we concluded that two of Chris’s pensions should remain in place. Indeed, one had extremely valuable Guaranteed Annuity Rates (GARs). However, we recommended that the others be consolidated into a more cost-effective contract. We also reviewed and realigned the funds which Chris held in his pensions, to ensure that they matched Chris’s attitude to risk.
This was only half of the job though.
When we compared Chris’s retirement income requirements, to what his pensions would give him, there was a significant shortfall. Chris had spare capital, outside of his existing pensions, so we utilised unused Pension Allowances to help fund the gap in his retirement savings. His contributions benefited from tax-relief, giving his retirement saving a further boost and moving him closer to achieving his objectives.
When making these recommendations to Chris we also explained that:
- The value of his investment can go down as well as up and that he may not get back the full amount he invested
- Past performance is not a reliable indicator of future performance
- Investments should be regarded as a long-term investment and should fit in with his overall attitude to risk and financial circumstances.
How did Chris benefit from receiving independent financial advice?
Simply put, Chris now understands:
- Far more about what he wants to do in retirement
- How much it will cost
- What his current pensions will give him
The additional funding, along with the tax-relief, will help to bridge the gap in Chris’s retirement planning. While our regular reviews will ensure he stays on track to meet his retirement goals.
Finally, Chris also now understands the options when the time comes to retire and how Pension Freedoms will allow his income to be moulded to suit the way in which he wants to phase himself in to retirement.
A pension is not normally accessible until 55 (57 from April 2028)
