Financial Advice - Pension

Question 1

What is phased annuity purchase

Answer 1

Phased Annuity purchase:
Can choose how much to crystallise to achieve required income
Income in early years is mostly PCLS so tax efficient
Annuity provides lifetime guaranteed income
Include options, widow benefits, annuity protection
Flexible annuity option can be used to decrease income if required
Uncrystallised funds can continue to grow/potential investment growth
Any remaining uncrystallised funds available for beneficiaries
Tax free if death before 75/IHT free

Question 2

What is phased Flexi-access drawdown

Answer 2

Can choose how much to crystallise to achieve required income
Tax efficient income and total control over level of taxable income taken
25% PCLS/ 75% TO FAD
Remainder of fund can remain invested to suit ATR
Potential investment growth
Not locking into annuity rates
Tax free death benefits before 75, flexibility of beneficairy.

Question 3

What is UFPLS

Answer 3

Can access as much of pension fund as income need require
up to 25% tax free/ excess taxed as pension income
Tax efficient income, remaining can be invested to suit ATR
Potential investment grwoth
Tax free benefits before 75/ flexible of beneficiary

Question 4

Explain how a purchase life annuity can be provide additional income in retirement

Answer 4

• Use PCLS or savings to pay a lump sum to an insurance company
• This is irrevocable
• Annuity rate agreed for lifetime
• Income paid as a mix of return of capital and income
• Return of capital is tax free
• Income element is taxable as savings income
• Can use personal savings allowance
• Basic rate income tax is deducted at source by insurance company
• Escalation is available
• joint life available
• Capital guarantee available

Question 5

What is class 3 national insurance contributions

Answer 5

Voluntary contributions
Paid if Amir or Karina inadequate NIC record
Allowing for entitlement for new state pension
Should paid within 6 year of tax year of shortfall