Pension Savings Case Study

Client Objectives

This client came to see me to seek advice on how much she needed to contribute to her pension. Her company were making employer contributions into a company pension. She wanted to know whether she should and how much she should be contributing in order to achieve her desired income in retirement. She had one other pension with a previous employer. She was married with two young children.

Work I Carried Out

The first thing I did was to project forward the couple’s expenditure to retirement age and adjust for items such as mortgage payments, life assurance and school fees that would no longer need to be paid. This gave an idea of the level of pension income that would be needed to cover the likely outgoings. I then projected forward the potential pension pot she might have by the time she retired based on employer contributions continuing at their current level and a small amount of growth in the pension fund investments.

This gave a projected ‘pot’ at retirement age. I then used current annuity rates to give an idea of the sort of pension income that this size ‘pot’ might generate if she were to buy an annuity. (An annuity gives a guaranteed income for the rest of your life. It may not be the choice you make at retirement but is easy to ‘model’). It was then possible to compare the projected income with the projected outgoings to see what the size of the ‘gap’ was likely to be. This could then be translated back to assess how much her employee contributions needed to be.

The next step was to see if this was affordable given the couple’s current income and expenditure and to look at other considerations such as tax planning. Tax considerations also needed to be taken into account when looking at how she would draw her retirement income. As a result of this analysis I concluded that they should also start to build up her spouse’s pension. This would mean that he could build up a retirement fund and take retirement income that would be taxed separately and probably at a lower rate.

Value to the Client

The client now has peace of mind that she will be saving sufficient to provide her a comfortable income in retirement. This is being done in the most tax efficient way when considering both pension contributions and retirement income.

Savings and Investments Case Study

This client came to see me with a number of different insurance policies in place that he thought could be excess to requirements. Meanwhile he wanted to start saving to buy a holiday home. He had nothing in place at that time.

Insurance Case Study

The client came to see me with 7 different policies. He had 3 joint life assurance and critical illness policies, a family income policy, and an income protection policy. The client had recently re-mortgaged his property and had a new 25 year mortgage term. He was self-employed and also needed insurance to cover him if he couldn’t work due to illness…

Retirement Case Study

This client came to see me with 7 different pensions. He was a few months away from his 65th birthday and ready to retire. He’d received a lot of documents from the pensions companies but didn’t really know what to do with it all.

His objective was to cover his monthly outgoings in retirement and then have enough to be able to enjoy life in the next 10-15 years. He wanted someone to work out his best options…

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