Retirement Flashcards
Describe the process to ensure Simon and Graces pensions and savings are on track to provide the desired level of income in retirement
Establish the level of income req’d at target retirement age
Obtain state pensions forecasts
Agree inflation assumptions to be used and likely tax status in retirement
Agree growth rates based on ATR
Obtain fund projections to intended retirement age of pensions and all other assets to be used in retirement
Include all ongoing conts and any make allowances for any increases
Based on the term, the likely longevity/withdrawal rate
Determine the fund required to provide this level of income and the shortfall
Calculate the level of conts to meet the shortfall
Carry out regular reviews and adjust accordingly
Outline the factors to consider when deciding whether to consolidate Simon’s deferred pensions into his Assure Life PPP
A comparison of charges on the deferred schemes and the current schemes
Any transfer penalties
Any guarantees or life cover within the deferred schemes that would be lost
Comparison of fund choices between the deferred plans and the assured life
Ease of admin between the deferred plans and the assured life/online access
Availability of flexible retirement options
Whether Assure Life accept transfers
Cost of the advice
Out of market during transfer
Describe the key benefits if Simon increases the employer conts to his pension
Tax-free extraction of profits from
The company as it is a an allowable seduction against corporation tax
Not a benefit in kind so no income tax payable by Simon and avoids NIC’s by Simon and the company
Higher amounts of carry forward can be used as tax relief on employer conts not limited by relevant earnings
Will provide a higher income in retirement, higher PCLS and so increase his chances of affording to retire at 60
Maintains couple disposable income
Tax free growth of an asset that is outside the estate for IHT and that will pay tax-free death benefits if he dies before 75
In trust so protected in the event the company becomes insolvent or Simon is declared bankrupt
Describe the key benefits if Simon increases his personal conts to his pension
He will receive up to 45% tax relief on his conts as the dividend income will fall back into his basic rate tax bans and will not be taxed at 7.5% rather than 32.5%
All growth will be free of income tax and CGT
It will produce a higher income in retirement and higher PCLS which will increase his chances of affording to retire at 60
The funds are in trust so protected if he is declared bankrupt
The fund is outside his estate for IHT purposes and will pay out tax-free if he dies before age 75
How does salary sacrifice operate and what are the tax benefits it can provide for Simon
The agreement with the company should be in writing
Simon’s gross salary would be reduced by a specific amount
The contribution will be treated as an employer co tribute on and as a result reduces the corporation tax payable by the company
Simons salary will reduce and so will Simons income tax bill as well as the NIC’s paid by the company and Simon
Increase the PCLS available and the couples IHT exempt assets
