Ms B – Data Capture Industry
“To transfer or not to transfer was my dilemma and knowing very little about pensions I spent many weeks of frustrating research without getting any answers so I felt very fortunate to find Nicola Downs and Trentham Invest.
Finally someone was listening to what was important to me and the outcome I wanted. Being given the facts to enable me to reach a decision in a way that I could understand was invaluable.
Meeting Nicola and the team in person assured me that I was right to put my faith and trust in them to advise, guide and support me through the transfer process and beyond.
Thank you Nicola and all the team for your expert guidance and advice. I have absolutely no doubt that I made the right choice.”
Ms B is 51 years old. Whilst she is married she has been separated for 8 years but is not divorced. She has three children. Ms B has a mortgage of £59,000 on a repayment basis to age 65. Her property is currently worth £300,000. Whilst Ms B has her own business, a bistro, and whilst she works in the bistro, there is not enough income for her to cover her mortgage payments as well as paying in to a pension for her future.
Longer term she would like to downsize, sell her property and use the funds for further income. In the meantime she would like to use some of the transfer monies to pay off her mortgage and in doing so reduce her working hours. She would like to leave the full value of her pension to her children.
When Ms B contacted Trentham Invest Limited she had a final salary pension with Aviva and a group personal pension with Aegon from when she worked at Cognitronics for 10 years, which was some 20 years ago. In April 2016 Ms B’s final salary transfer value was £213,529. The group personal pension scheme value was £22,940. Total resources were £241,066.
Before contacting Trentham Invest Limited, Ms B had already contacted a number of IFAs who said to keep her pension where it is. However, on the other hand her old Cognitronics colleague said to get her money out. And whilst she had tried, she had not been able to speak with the Trustee of the scheme. This made her feel concerned about the robustness of the scheme itself. What is the best thing for her to do: Transfer? Stay In? What if the scheme goes into PPF? If the scheme is rejected from PPF what does that mean to her? If the scheme is accepted what does that mean to her? If it is rejected what does that mean to her?
5 out of 6 final salary pension schemes are in debt. If you are single or divorced when you die your pension dies with you.
Equally concerning to Ms B is her pension legacy. This is important to her because of her children. Whilst she would like the full value of her pensions to go to her children, she knows from close personal experience that, on death, a pension can simply cease, leaving no legacy whatsoever.
Ultimately she contacted Trentham Invest Limited as she wished someone to provide her with thorough and robust advice that would help her to know what is best for her to do; to provide her with the thorough level of understanding that she needed in order for her to make the decisions she needed to for her future.
What we did
We asked the Aegon Group scheme and the Aviva final salary scheme many questions, deciphered the information, translated the complexity of her situation and organised the information in a clear way to understand. We pointed out the boundaries of what she could do, and what she could not.
We clearly presented the information to show the consequences of staying in the final salary scheme to age 60, taking early retirement at 55, the risks of those decisions both now and in the future.
We then presented the consequences of taking the CETV on offer and the results of that decision and then compared them to staying in the scheme.
- Ms B decided to transfer out of her Final Salary pension and move the funds in to an alternative pension arrangement. This also enabled her to transfer her group personal pension in to the same arrangement thereby consolidating both contracts together and, whilst the consolidate scheme is slightly more expensive to run, she is able to use Trentham Invest Limited’s portfolio monitoring service to manage the risk of her pension investment.
- Ms B is now in control of her entire pension estate and its legacy. On Ms B’s death the whole of her pension (current value £213,529) will be left to her 3 children whereas if she had left her pensions where they were her children would receive nothing.
- Ms B has access to a larger tax free cash amount with which she can pay off her mortgage.
- When Ms B reaches age 55 (early retirement age) she can access a tax free lump sum of £56,633 compared to £30,039 if she stayed in the company scheme.
- Alternatively, when Ms B reaches age 65 (normal retirement age) she can access a tax free lump sum of £78,393 compared to £62,602 if she stayed in the company scheme.
- At age 55 Ms B’s pension income will be £9,061 per annum compared to £6,121.08 per annum if she stayed in the company scheme. If she were also to take her tax free cash allowance this would be £6,796 per annum compared to £4,506 per annum if she stayed in the company scheme.
- At age 65 Ms B’s pension income will be £12,542 per annum compared to £13,563 per annum if she stayed in the company scheme. If she were also to take her tax free cash allowance this would be £9,407 per annum compared to £9,390 per annum if she stayed in the 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.