Ms J was single and in her late fifties. She had a twenty-three year old son living at home with her. She worked as a Business Manager for a large PLC she was an active member in the company’s DB scheme but also had another deferred DB Scheme with a local authority. She had about £15,000 in cash in the bank and one of her main aims was to help her son buy a property. A family friend had suggested she contact us to see how we could help:
The main issue for Ms J was where she could get the money to buy a property without having to borrow. She was keen to know how she could access a lump sum via her pensions. As the local authority did not allow early retirement before the age of 60, this meant there was a lump of £42,000 in that DB scheme that Ms J could not access. She didn’t want to draw any income as she would still be working and she was a higher rate taxpayer. However, she knew she would need a higher income than the scheme would provide at retirement. As she was not married, there was no requirement for a spouse’s income from the scheme.
We looked at the detail of the deferred DB scheme and produced our report and analysis. We discovered that although Ms J couldn’t access the money as things stood, we could transfer her pension away from the local authority for her. She could then access 25% of it as a lump sum via a drawdown scheme and defer the income.
With a DB scheme, the individual doesn’t have this option as they have to take everything in one go. For many people, however, as in Ms J’s case, they may want to take a proportion as a lump sum to buy a house, pay down a mortgage or pay off other debts etc, but don’t want the income as they are intending to continue working for another five years or so.
We also provided a cash-flow forecast report to show the impact of different future income possibilities, for example of a single income, and provided an investment proposition report. Ms J was impressed by the flexibility we were able to offer.
As a result of our recommendations, we transferred the cash equivalent transfer value to a drawdown plan for Ms J. We also enabled her to take 25% or £101,000 as tax-free cash at age 58 and she invested the remainder in our Signature Investment system for future income. The investment is gradually replacing the value taken at the outset and has produced 35.31% return in the first four years.
As Ms J’s son was over 18, we also recommended that she complete a nomination form for payment to her son on her death. This way, not only was she able to buy a house for her son without any borrowing but the nomination meant that whatever pension was left would also go to him.
Our knowledge of DB schemes and the permissions and licences we have from the Financial Conduct Authority meant we could transfer the scheme in house without having to involve a third party. We managed all the paperwork and arranged the transfer within just six-eight weeks. Overall, it was a great outcome as we were able to help Ms J achieve what she had been struggling to herself; a tax-free lump sum, no taxable income and a house for her son.
VouchedFor Asked: 'How did your advisor help you?'
"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."
"Gave me advice, helped me understand in plain English , was very helpful, very professional and calm."
* 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.
Get in touch
Bailey Richards Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority. Registration number 583487. Click here to review our registration.
Registered in England & Wales, Registered No: 08058075, registered address:
Suite 4, Earlshouse, Earlsway, Team Valley, Gateshead, Tyne and Wear, NE11 0RY
The guidance contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK