Pensions On Divorce
- Transferring out of a final salary is unlikely to be in the best interests of most people.
- The value of pensions and investments, and the income they produce can fall as well as rise. You may get back less than you invested.
The following is an example of a pension review and subsequent consolidation for one of our clients. Please note that this is a fictional case for illustrative purposes only.
Brian works for an accountancy firm. He has a very busy life in which his work life dominates his time.
He had received no advice or support regarding his pensions or other investments for a while, but now at age 48 he wants to understand better his personal financial position and more importantly, when he will be able to afford to retire, or at least achieve financial independence (no longer have to work).
A large part of this is looking at how his pensions are invested and what he needs to do to achieve the level of income in retirement (at age 65) that he wants. His ideal outcome was for all of his pensions to be in one place so that he could better understand what they are doing for him.
The Four pension plans were as follows:
1) Previous Company Pension Plan with Provider X – the fund and transfer value were
2) Stakeholder Pension Plan with Provider Y – the fund and transfer value were £35,300.
3) Personal Pension Plan with Provider Z – this is the pension that John is currently paying
into – with a current fund value of £21,000.
4) Current Company scheme, to which both he and his employer are contributing.
As part of our fact find Brian had told us that he intended to move on from his current Company within the next twelve months, so he did not wish to add to his Pension plan there.
The outcome of our review of his pension was to consolidate X & Y into Z and to leave his current scheme as it was as it included employer contributions. This we agreed to review at our annual meetings to see how his personal circumstances had changed, as they were sure to do.
We were also able to provide Brian with a cash flow plan to help him understand whether he was going to be able to achieve his goals.
The benefits to Brian in completing this were;
- cost savings due to the consolidation,
- a more suitable investment strategy moving forward, which will be continually reviewed in line with his changing needs and views,
- a good understanding of how much he needs to increase his contributions in order to try and achieve the income he desires in retirement,
- the ability for him to view his plans and also any other investments, all on one platform, whenever he wishes to.
It’s not always appropriate to consolidate as some pensions can carry additional benefits which would be lost upon transfer – but we will tell you if this is the case – and our recommendation may be to keep an existing plan in place. In our experience, consolidated plans often have lower charges, offer more flexibility and choice and of course we provide ongoing advice. You also get a clearer picture of what you might receive in the future, which helps with planning for your retirement.
For an informal chat about your situation, why not call us today on 01473 717939.
Planning for the Future? Need Advice? Not Sure Which Path To Take?
Our Process For Providing Quality Advice
We will gather information from you about you and any plans you already have in place.
We'll explore and research various scenarios to make the best use of your existing plans.
Like most of our clients, you will probably prefer Cardinal to do the necessary work to put your plan into action.
Nothing stands still, so it makes sense to review your plans regularly.
Cardinal Financial Planning and Wealth Management Limited is an appointed representative of Quilter Financial Services Limited and Quilter Mortgage Planning Limited, who are authorised and regulated by the Financial Conduct Authority. Cardinal Financial Planning and Wealth Management Limited. Registered in England and Wales, under company no. 09565939. Registered office address - Unit 4 & 5 Brightwell Barns Waldringfield Road, Brightwell, Ipswich, Suffolk, England, IP10 0BJ. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK