Mr K - DB scheme


Mr K was 63, divorced and had three grown up children. He had worked in the media industry for twenty years and was an active member of a defined benefits (DB) scheme. He also had £165,000 in an ISA. Mr K came to us as he was keen to explore what retirement options were available to him.

The challenge

Mr K wanted to be able to take £30k income in retirement but his DB scheme income was only going to give £19,000 gross per annum. This was because, like many DB schemes, it was holding a significant amount back for a spouse’s pension which in Mr K’s case he didn’t need. As things currently stood, when he died, the pension would go back to the scheme and not to his grown up children.

Mr K was uncertain as to whether he should take a tax free lump sum and reduced pension from his company pension or opt for a full company pension without any tax free lump sum. We explained that there was in fact a third option, which no one had spoken to him about. He could get a transfer value from his company pension and put that into a drawdown contract, from which he could take more than £19,000 out as income in a tax efficient way and still have the fund to pass on to his children.

The solution

After conducting some detailed research and examining Mr K’s current scheme, we looked into the possibility of transferring the scheme and produced our recommendations, which showed that this third option was indeed the most appropriate.

We proposed an income strategy in line with his risk profile from our Signature Investment System to fund his income. We also ran a cash-flow report to show Mr K the effect on his fund according to various scenarios.

We went ahead and transferred the cash equivalent transfer value to a drawdown plan. As Mr K did not need his tax Free Lump sum in full our recommendations included a combination of tax-free and taxable withdrawals. We also ensured nomination forms were completed so that the pension would be paid to his children on his death. As Mr K had already reached retirement age, the whole process was completed in just four-six weeks.

Overall, it was a highly successful outcome, using a combination of the drawdown plan and his ISA Investment to produce £30k per annum, with a 5% effective tax rate applied, which delivered a 29.73% return in the first three years. We demonstrated that we were able to meet Mr K’s immediate needs to fund his retirement while at the same time providing for his children on his death.

VouchedFor Asked: 'How did your advisor help you?'

November 2018

"Simon took on board my situation and delivered exactly what I expected."

November 2018

"Initially Simon RIchards provided me with easily comprehensible information on my options for investment while making it clear that the choices were mine. He also explained the costs of the service which I feel are very fair and for me totally of value. With great patience he sorted out the chaos that was my starting point with him. The ongoing support and information provision has been excellent."

November 2018

"Gave me advice, helped me understand in plain English , was very helpful, very professional and calm."

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Bailey Richards Wealth Management Ltd
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Telephone: 0191 716 0009
Fax: 0191 716 0034

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* Please be aware that by clicking the above button you are now leaving a regulated site. Bailey Richards Wealth Management are not responsible for the content on VouchedFor.