BRIGHTER FINANCIAL SERVICES LIMITED

Pensions & Retirement Planning

What we do for our clients…

Helping people work out what to do with multiple pensions, helping them plan their retirement and make a pension income work whilst keeping product charges down and managing tax efficient ways of saving is the type of pension and retirement planning that we do for our clients.

Starting a pension…

Retirement may feel like a long way off for some but putting off saving into a pension means that you are missing out on a valuable tax-efficient way of saving and drawing a retirement income.

Maybe you are like Rachel and cannot see the value of a pension when there is so much else to consider spending your money on…?

Paying enough into a pension…

Many of us, either taking out a pension for the first time or having held one or two pensions for a while, will think that that is it. I have a pension, I am sorted. But this is just the start.

Pensions, as with all investments can increase and decrease in value and it is important that they are reviewed to ensure that what you thought you might get, in retirement, is actually the reality.

Many of our clients are surprised when we tell them that their pensions will not provide them with the income they need in retirement, even though they have been paying regular contributions for years.

It is always worth checking whether what you have will give you what you expect to get in retirement.

Our financial planning team can use forecasting modelling tools to look at your pensions and savings (including the state pension) to determine whether you will have enough income in retirement.

The report produced will form part of our advice at a pension review or as part of our servicing package for existing clients.

Pension forecasting is vital to ensure that:

  • You do not have a cash shortfall in retirement
  • You can work towards receiving the income you need in retirement
  • You are supported during the years of saving into your pension and investments with financial evidence that enables you to effectively plan for the future.

Pensions and retirement planning – a case study…

Maggie Dudley wishes to retire at the age of 59 years, taking her 25% tax free cash as a lump sum and receiving an income in retirement of £15,000 annually.

John, one of our financial advisers carries out a cash flow model with Maggie to show him how near or far she is from being able to achieve this with her current savings.

Step 1 – John gathers information about Maggie’s available funds:

This chart shows Maggie how her investment and pensions will reduce over time in order to be able to support her with the income that she desires. The chart shows Maggie that her savings are likely to be able to support her with the income she desires, well into her 80’s.

Pension 1

Investment 1

State benefit income

Main Income

Investment 1 -Withdrawal

Pension 1 – Withdrawal

Based on Maggie’s retirement options and market conditions, John shows Maggie how from the age of 59 years old, when she wants to retire and the main income stops, she can make up the £15,000 she needs a year in retirement from her pension, investment 1 and the state pension.

Taking a pension

Pension Freedoms have allowed people to take their pensions more flexibly and earlier. Whilst having this degree of accessibility is of benefit to people, after all the money has been paid in by you, it is important to understand the potential risks associated with these freedoms so that mistakes are not made and income does not last well into retirement, as it was set up to do.

Planning how to take out a pension is as, if not more important, than paying into a pension in the first place…

Taking all of your pension as draw-down…

What we will discuss with you if you are choosing to draw-down your pension:

We will ensure that we have developed a financial plan with you so that we understand the risks you are willing to take with your investment and that you have clear objectives for needing your pension as a draw-down arrangement.

In particular we will cover the following:

  • Your specific circumstances and the need for a drawdown pension arrangement as a result of those circumstances
  • Risks associated with this product in terms of maintenance of high income drawdown strategy, tax implications, erosion of remaining funds and annuity rates now and in the future.