"From my perspective, working with you made a complex subject/task effortless and enabled me to reach the right conclusion that best supports my retirement plans in the compressed timescales that we had to work within."
52-year-old Raymond is Director of Technology Compliance in a Law firm. From his previous employer, he has a deferred Final Salary Pension arrangement. He wishes to retire at age 55 with an equivalent income to that which he receives presently. He received a cash equivalent transfer value (CETV), guaranteed from June to September, which was twice that which he received last year. He wishes to pass on the whole pot to his wife and child when he dies as opposed to just 50% of the pension to his wife.
He wanted an explanation of the various options open to him; advice on what options would suit him and his wife to meet their future needs, and all assistance necessary to achieve those goals.
What we did
We analysed the options of staying in the scheme and taking early retirement at age 55, and normal retirement age 63 versus taking the transfer value on offer today, taking early retirement at 55 or taking the money at an equivalent normal retirement age 63. We also illustrated the death benefits to his wife and child for all scenarios.
The data and results were put into a stay column and a transfer column. The data was then highlighted to show the highest number in each scenario.
We concluded the total number of highlighted boxes in the stay column was zero and in the transfer column was six.
We concluded they should take the cash equivalent transfer value on offer. We also covered the scheme funding position, the impact on him if the scheme went into financial difficulties, their attitude to investment risk, their investment experience and concerns with investing, our process and due diligence for investment design, build and ongoing maintenance.
We opened a new pension pot, transferred the sums and his fund is now monitored on our wealth tracking system, which gives Raymond the confidence his money is being proactively managed.
- Pension of £29,549 per annum if he took early retirement from the final salary pension scheme compared to £49,031 pa if he transferred out, achieved 4% growth on the pot and took an income equivalent to 4% from the pot.
- On death, his wife would get £1,089,720 lump sum versus £20,440 per annum from staying in the scheme. She would have to live 53 years to get the capital back.
- Flexibility to increase, decrease or cease pension income at any time subject to scheme limits.
- Flexibility to access his resource without penalty by taking a cash lump sum.
- Legacy worth approx. £1.00 million can be left to family. There would be no such legacy if he stayed in his company scheme.
Note: The events and figures quoted in this case study are from a real Trentham Invest client; however, the names have been changed to protect client confidentiality.