Frequently Asked Questions
» I am a trustee of a final salary pension scheme. Does your investment service have experience of final salary scheme investments? Can you explain the impact of the final salary scheme funding position on my balance sheet and how to take steps to improve this?
Not only is Final Salary pension scheme trustee investment one of the fastest growing aspects of our business but the specialist level of our in-house pensions technical advisory service ensures that trustees such as yourself can be reassured that your own professional responsibilities as a trustee are supported. We have been frequently brought into pension schemes by trustees, particularly since the credit crunch, to help them establish a strategy to rebuild any underfunding.
Because we are smaller than the large national consultancies, we can offer a more personal and bespoke service for small to medium size final salary schemes and can often help to reduce your advisory costs. Most importantly we believe we can bring our significant investment expertise to this market and help to reduce deficits and deliver strong investment performance.
» I have heard that it is possible to gift money to my children/grandchildren via pension contributions. How does this work? I would also like to gift larger lump sums. What else can I do?
You may be able to pay up to £3,600 a year gross into a personal pension for your children/grandchildren (even if they are not earning), and the contribution will benefit from basic rate tax relief.
Therefore if you want to pay the maximum £3,600 a year gross into their pension, then it will only cost you £2,880 a year, as the income tax relief for the tax year 2010/2011 will increase your contribution to £3,600 a year.
If you are in the position to save larger lump sums for your childrens/grandchildrens future pensions, then there are other arrangements that can be made to provide an income for your heirs, without the use of trusts. We would be happy talk to you and explain how these arrangements work.
» I am approaching retirement and I want to discuss my options. Can you advise me?
Taking your retirement benefits can seem like a bewildering array of choices to make. Do you take a pension commencement lump sum or not? Do you defer taking benefits from pensions and use other assets to create an income? Do you buy an annuity or move into unsecured pension income?
We are used to helping clients with all these questions and more, and we explain your options in plain English.
These are important decisions that you have to make and the choices, once made, cannot always be undone so it is therefore essential to get the right advice at this time.
» Can I pass my pension fund to my children/family?
Yes. If you have not yet taken any benefits from your pension, the position is straightforward. On death, the pension fund will normally fall outside your estate, and can pass to your children, free of inheritance tax.
You can start drawing an income from your pension, without actually buying an annuity. This is known as "unsecured income", or "drawdown". If you do this, it means that on death the fund can be paid out to your beneficiaries.
Of course there are risks associated with leaving your pension fund invested and not taking an annuity and this option is not right for everyone Pensions legislation is, as ever, undergoing significant changes and it is therefore essential to take expert advice on these issues before taking any action.
» I have a large pension fund which is near the “lifetime limit”. Do you know how I can protect future growth in the fund from tax?
If you have a large pension fund which is at the lifetime limit then we have solutions to protect future investment growth on the fund from being liable to lifetime allowance tax charges. Please contact us to discuss this.
» Recent media investigations have confirmed my belief that pensions charges are excessive. What is your stance on this?
Overcharging is wrong. However not all pension plans are highly charged. Pension savers need to seek out good value.
A recent Panorama programme made out that pensions were poorly performing and expensive saving vehicles, but this does not have to be the case if you take the right advice. They are actually highly tax efficient and the real problem is that many people do not appreciate just how much they need to save to successfully fund their retirement or how to access the funds that will deliver the best results for them over the long-term.
We believe that pensions form an important part of a retirement savings strategy.
» I am a high earner and I have seen the amount that I can pay into my pension, with tax relief, restricted due to recent legislation change. Can you advise what I should do?
Last year the government proposed changes to the taxation of pension savings to be implemented in April 2011 and put measures in place to prevent high earners taking advantage of the current regime. The coalition government has now scrapped these somewhat complicated proposals and outlined the changes it intends to make instead. Anti-forestalling measures will remain in place until April 2011. The government has now decided that the annual allowance (the annual limit on pension contributions eligible for tax relief) will reduce from £255,000 to £50,000 for everyone. The Lifetime Allowance will reduce from £1.8m to £1.5m. As is always the case with pensions legislation, the actual detail is complex and so if you are in the position where you are making large pension contributions or have a fund which is approaching the lifetime limit, then you should seek advice.
We are able to help you make the right decisions in light of these changes.
» I have seen the value of my pension fund reduce dramatically due to poor investment advice. What do you do that is different?
We are different by design. We are the largest independently owned IFA firm in Scotland and one of the largest in the UK. We have one of the highest ratios of support staff to advisory staff in the business. Which means that we can deliver an exceptional service to you. We have been recognised numerous times in industry awards including "Best UK Investment IFA" in 2005 and 2007 and "Top 3 UK Investment IFA" in 2010. So others seem to think we are doing something right. But we are not complacent. We continue to invest in the best people, research and systems so that we can remain at the top of our game and deliver the highest quality of advice.
We spend massive amounts of money on institutional investment research, and conduct rigorous qualitative analysis of funds on your behalf to identify those funds that we believe will out-perform the index. We personally interview the fund managers and only recommend them once they have passed through our selection process. We monitor them closely and will actively recommend fund switches with your portfolio where we feel this would be beneficial. We make no charge for fund switches so you can be assured that our recommendations to switch funds are made for only the right reasons.
» I have a collection of pension plans from various employments which I suspect may be underperforming. Can you do a pensions review for me?
Many people have collected a number of pension arrangements over the years and become confused about what they have and how they are performing. We can undertake a complete review of your existing pension arrangements and advise you on your best course of action, whether that is to leave plans as they are, make fund changes to existing plans, or to transfer to new arrangements. This is an area where taking specialist advice is imperative in order to avoid costly mistakes. We can help you with these decisions.
» How much pension fund is enough to live the kind of retirement I want?
The normal answer people are given to this question is "probably more than you think", which is not particularly helpful. By knowing the answer to this question, and by having a target to aim for, you have a far better chance of reaching your goals. We can help you find the answer, and put an investment strategy in place to help you achieve it.
Having a good investment plan in place is vital to getting to your required level of fund. Pensions are only as good as the investments that they contain. And that is where our expertise can help.