Charles P – Long Established Importer
“I was stressed and needed professional advice. Now I feel relief more than anything else. Things were not as bad as I thought they were; we just needed real professional help. The feedback we got back from an existing client of Trentham Invest was everything we thought it would be and it was the trust that this person had in Nicola that we feel we have found.
We were so very impressed by the amount of groundwork that had been done before our meeting. Every minute we had during the meeting was not bogged down with ‘what about this, what about that’ so we were able to take it to a higher plane quicker which both saved time and for us was almost soothing.”
Charles, a 55 year old senior executive at a family run importing business, was concerned about a 60% funding hole in his employer’s final salary pension scheme that he had identified on a pension statement. Other warning signs that his pension was at risk were:
- His employer was not keeping the pension contribution promises it had made.
- In 2007 the scheme closed to new members.
While the pension promised to pay a retirement income of £46,665 per annum, if the company or scheme became insolvent he could end up receiving less than half this amount.
Charles had been offered a much reduced cash equivalent transfer value (CETV) with a deadline looming but advice from other Independent Financial Advisers had been narrow and inconclusive: “get your head down for four years”, carry on ‘til you’re 65”, “don’t worry”.
But his burning questions were:
- Should he stay with the pension?
- Was early retirement the best option?
- Should he transfer out?
- What would be the implications on his and his wife’s mortgage with each option?
Charles and his wife Alice had heard about how Trentham Invest had provided a clear way forward for someone in a similar situation and so made the 200 mile journey to meet final salary pension expert Nicola Downs in person.
What we did
Before meeting with Charles we conducted an in depth analysis of his final salary pension scheme and the short and long term consequences of taking each of the options open to him. This not only considered the expected pension he might receive if the scheme survived or failed for each option but also how Alice would be left financially in the event of his death under each of the scenarios.
We also looked at how taking a lump sum today could be used to reduce the mortgage debt burden they had, relieving some of the current day to day financial stress they were experiencing.
Through having their situation presented in a clear and easy to understand way, Charles and Alice were able to confidently make the decision to take the pension benefits under their own wing.
We then worked closely with the scheme’s trustees to arrange the terms and timescale of the transfer.
- Reduced Charles and Alice’s mortgage outgoings by 75%.
- We did a work around on their expected income of £46,000 pa and replaced £43,000 pa.
- In the event of Charles’ death, Alice would have previously received £31,078 pa plus a death in service lump sum of £266,972. However, under the new arrangements she would receive £810,527 if before retirement or £364,737 (after 55% tax charge if taken as lump sum) if in pension drawdown.
- No longer need to rely on two full-time incomes to maintain their standard of living.
- With a huge amount of financial stress being lifted, Charles can now afford to reduce his working hours and look for an alternative part-time job.
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.