Lifetime Allowance Reducing – Are you affected?

If you hold a pension pot equating to more than 1.25m then you need to act now to protect your future pension.

In April 2014 the Lifetime Allowance, which currently stands at 1.5m will be reduced to 1.25m. This will mean that those affected will be subject to a lifetime allowance tax charge on an extra £250,000 of their pension.

If this affects you, it is now time to explore a lifetime allowance protection scheme which works for you ensuring that you achieve the pension and retirement you have planned.  The most recent fixed protection schemes have been available for clients from August 2013 but it’s not too late to join and with the April deadline nearly upon us now is the time to act.

Don’t forget – the lifetime allowance test calculations for occupational and personal pensions are different.  If you are unsure whether or not you could be at risk please do not hesitate to call.

Call or Email us now for a  review of your pension and circumstances.

What are Discretionary Fund Managers?

A Discretionary Fund Manager is a third party professional manager who will work for the benefit of the client and help protect their investment from losses and maximise potential for growth.

When choosing this route, clients will be assigned their own highly qualified investment manager, who will hold the accountability for their portfolio and will meet with them on a regular basis.

These fund managers are able to personally choose individual portfolios for clients ensuring that their specific needs & objectives are met.

A positive aspect of this is that the fund manager can monitor the client’s portfolios on a very regular basis and because of the authority they hold they are able to act on the clients behalf to make amendments if it is in their best interests. They are able to respond more quickly to market changes and therefore potentially add more value than a portfolio that is reviewed on an annual basis.

Clients can also expect to be provided with regular investment reports.

Because discretionary Fund Managers are not restricted to certain investments they are able to open up clients choices into a wider range of assets, such as investment trusts and FTSE 100 shares.

Please contact us at Understand Your Pension if you would like to find out more about Discretionary Fund Managers.


Is your pension in a With-Profits Fund?

With Profits funds have come under scrutiny in recent years after a lack of transparency caused confusion and concern and many funds showed low or zero returns.

We first saw the emergence of with-profits funds back in the 1980’s, attractively advertised as a profitable long term investment option for the future.

During the market crash during 2000 – 2003, there were massive losses within the funds, bonuses were cut and providers pulled out. This has since seen a decline in payouts, which looks only to decrease in the future. Gaining information on exactly where the money is invested and charges which are being applied has been reported as very unclear for clients.

with profits fund - sorting out your pension

Phoenix Group is a consolidation company which took over a large number of the closed with-profits funds.  Most of these funds have been reported as paying out very low or no bonuses at all, many having not had a bonus in over a decade. Whilst this news does suggest investors transfer their money out of the with-profits funds there are some which hold valuable guarantees and therefore it may be worth staying put – this is where it’s crucial to review the exact type of product you have.

Another aspect you may need to look at is the penalties you could be faced with for withdrawing from with-profits funds. These are also known as a market value reduction (MVR).  There are opportunities in some cases whereby you can withdraw from the funds without incurring a penalty.



Whether you have a with profits fund and are unhappy with its performance, or you are looking to invest in one, you need to now explore all of your future options in order to ensure your money is going to give you a healthy return when you most need it.

With just one area of investments detailed above the question has to be; do you really know if your money is working for you? The fund options available to you should enable you to feel confident that you have made the best decision and will be retiring with a healthy sum.

Please contact us for a review.

Would you like to guarantee part or all of your pension ?

Certain pension providers can offer you a range of guaranteed products in a part investment/part insurance retirement portfolio.  They allow you to choose from a number of risk-rated investments that include income or capital guarantees and protected growth funds.  While for many people these options will seem very attractive, certainly when contrasted with the limitations of standard annuities, you should consider the benefits they can have to your own circumstances before deciding to invest in one.  A review of the key advantages and disadvantages of pension guarantees might help make your decision.

Firstly, the design of the guarantee is that it should allow you to get at least as much out of your pension as you put into it.  The guarantee is a safeguard against common retirement concerns, like running out of money or losing money to poor investment performance.  Perhaps the most enticing reason to invest in a guarantee is that it allows you the opportunity to benefit from potential market growth in a way that traditional annuities don’t, while still protecting your existing pension.  The amount you invest is entirely up to you and you can guarantee all of your investment or just part of it.  There is also a choice of options to look at – you can choose the one that best suits your needs, whether it be a capital guarantee or an income guarantee.

The biggest drawback of a guarantee is that it will cost a not inconsiderable chunk of your pension pot.  The exact cost depends on where you decide to invest your money and what fund/s you invest in or, in the case of a capital guarantee, the term you opt for.  A financial advisor will be able to inform you of the cost before you set up the pension.  Also, you should be aware that guaranteed annuity rates may be lower than standard annuity rates on comparative pension funds.

There are a couple of other things to be wary of.  Firstly, cashing-in your guarantee, whether capital or income, will most likely mean your guarantees no longer apply and if your provider does not offer a guaranteed fund value you may get back less than your original premium.  Guarantees depend on the issuing insurance provider being able to pay them and if all of a sudden such a company were to no longer exist, it would likely affect their ability to honour the guarantee.

Please visit the Understand Your Pension website to find out more about your pension options or to request a callback.

Robert Van Der Does is freelance financial journalist.

How Your Health Can Impact On Your Pension

When the time arrives to start considering a pension plan it’s important to review the different options available to ensure you get what’s right for you and thus receive the income you deserve.  An annuity, bought with your pension savings, will provide you with the assurance of a guaranteed income for life.  There are however other issues that you should take into account in order for the pension to work to your full benefit:  Ill-health, for instance.

If you have been diagnosed as suffering with a medical condition or if there is simply an activity within your lifestyle, such as smoking, which may reduce your life expectancy, you and/or your partner may be eligible for an enhanced or impaired annuity.  Annuity rates are calculated on an individual basis and there are no standard criteria across all pension providers, but there are over 1,500 medical conditions that may qualify for this higher rate.  Chief among them are cancer, diabetes, high blood pressure, stroke, Parkinson’s disease, heart problems and high cholesterol.  Enhanced annuities typically produce an income boost of up to 40% on standard annuities.

Senior couple calculating pension

It’s vital to remember though that once an annuity has been put in place it cannot be changed.  For people in good health who don’t want to commit to an annuity there is the alternative option of a pension drawdown.  This is the commonly used term for a flexible personal pension plan from which you can draw an income and it has in fact been officially known as Capped and Flexible Drawdown since 2011.  From the age of 55 it allows you to extract the tax-free 25% lump sum from your pension plan, as with an annuity pension, but without taking out an annuity.

There are no health enhancements on the drawdown but it may produce a higher income than a standard annuity by way of its flexible nature.  The main advantage of the drawdown is that you remain in charge of your funds and can continue paying into your pension plan.  It offers potential for growth as your pension pot is invested in a tax efficient environment.  Of course that is balanced out by a higher risk, because your funds remain invested and they may not perform as well as you hope.  With the ever present possibility that health will fail in later life, a pension drawdown plan allows you to buy an annuity when you are ready.

However a new product has recently come to market that offers enhancements in respect of health issues but is still effectively managed very similar to a drawdown plan. This particular product allows you to take advantage of an higher income stream if you qualify through the impaired or enhanced route but the income is drawn off the pension fund (very much like pension drawdown), the death benefits are slightly different however – but unlike annuities where including spouse benefits can reduce the initial income –  the members’ starting income would not reduce – and the spouse would still receive 100% of the income on death (however this similar to pension drawdown and is dependent on size of fund ,age & health).

If you have any interest in respect of the above please make an enquiry through the website –

Robert Van Der Does is freelance financial journalist.

New website launched to offer jargon-free pension advice

There may be many websites out there that offer advice on pension plans but many of them provide inaccurate information or simply baffle the website user with financial jargon.  This is why the Understand Your Pension website was launched recently to provide impartial and jargon-free advice on personal pensions.

The aim of the site is not only to provide information about the different kinds of pension available but also to help people who may already have a pension to gain a better understanding of the benefits associated with their pension.

To find out more about the pension advice on offer why not visit the Understand Your Pension website today and you can get a better understanding of your pension options.