Chapter 4 - Retirement Solutions Flashcards
What should be in a financial plan of somebody in their foundation stage of life?
managing debts, such as credit cards, student loans and personal loans, creating a budget to track and control spending, enrolling the client in a company pension plan and setting aside funds for savings and investment
What should be in a financial plan of somebody in their early accumulation stage of life?
as a minimum, cover short-term debt management, purchasing a property, increasing pension savings and investments (maximising ISA allowances and/or tilting the portfolio towards equities) and possibly contributing to a self-invested personal pension (SIPP)
What should be in a financial plan of somebody in their late accumulation stage of life?
cover boosting retirement savings and investments through carry forward of unused annual allowances in the previous three years, and utilising other income, such as bonuses received
What is Business Asset Disposal Relief and the rules governing it?
CGT charged at a reduced rate of 10% providing the client is on the first £1 million of qualifying gains
- disposing wholly or partly of a business as a sole trader or a partner
- disposing of shares in a trading company, provided that the total holding represents at least 5% of total shares and voting rights
- owned for at least two years
What are the thresholds for purchase a first house using a LISA?
- a LISA must be open for at least 12 months
- the house being bought must be worth less than £450,000 with the aid of a mortgage.
- the money must also be paid directly to the solicitor or conveyancer.
When was the NEST Shariah Savings Fund Launched?
2011
What is the tax treatment of interest and dividends in a Collective Investment Scheme
paid gross, but is taxable
How are gains taxed within a Collective Investment Fund?
No tax payable
What are the normal options available to DC Pension Fund schemes at Retirement?
- annuity purchase
- uncrystallised funds pension lump sum (UFPLS)
- flexi-access drawdown (FAD)
- (where offered) purchase of a scheme pension paid directly from the assets of the scheme
What is sequencing risk?
Where withdrawals are being taken from the portfolio, the impact of a poor sequence of returns in the early years will be more pronounced
What is Phased Retirement?
clients who wish to start working part-time or to gradually cut back on their working hours until they decide to retire completely
What is the maximum pension rights that can be taken when a pension scheme is being wound up early?
£18,000
What is the average cost of staying at a care home?
£39,000 per year, rising to £50,000 if nursing care was also required
