HiThank youI wish to cover a number of areas today...
Including why ducking the pension issues is not an optionGive you some examples of what and where to look out for issues.Show you our process of dealing with pension & divorce cases.Run through two case studies and wind up with any questions.
Arena - more complicated - often a moving target with each case different - even where the same pension scheme is involved it is important not to rely on out of date information.Should sharing be the default position or is there value in earmarking and is there too much simplicity in offsetting.Professional standards are being tested.All the options need to be considered.
Public sector – Armed forces / Police / NHS etcThe pension credit member often has a retirement age of 65 (regardless of the member’s actual retirement date)Solvency of private sector schemes – take a view AXA – money purchase
New rules due to come in April 2009 – flexibility – Revisit cases? Age 55 from 2010 etcMarket value adjustmentsGuaranteed annuity ratesInsurance companies – difficulties – Legal & General
Both DB and DC schemes calculate and pay out the transfer many months after the sharing order.This can have serious consequences – especially with falling share values / transfer values.State benefits – BR19 & BR20Implementation charges – vary and can be expensive when dealing with multiple schemes
And I promise it won’t cost you or your client a kidney!I truly believe I can add value to you and your clients at each step of this processI will look at each stage in turn
This is a crucial stage and where I can add a lot of value and save a lot of time.Happy to get involved in the process at an earlier stage and happy to field calls without initial charge to build trust and a working rapport.Often delays around information which we can remind trustees etc of their obligations.
Work with two actuariesAdd value where we can but also back awayAdvantages and disadvantages of offset / earmarking / sharing
What happened next
CETV was not remotely adequate to buy the scheme pension on the open market based on current annuity rates
Assessment & Information Gathering<br />Often find that insufficient information has been gathered<br />Often find difficulties with Pension Scheme Trustees / Managers not knowing their duties<br />Without full disclosure we may have problems later in the process<br />
Report<br />Work in conjunction with actuaries<br />Options – Express / Bespoke / Stand alone<br />Demystify their reports<br />Set out options – pros & cons<br />
Advice & Implementation<br />Review report and ensure satisfaction<br />Provide financial recommendation to client<br />Project manage<br />Complete discharge papers<br />Liaise between the parties<br />
Case Study 1 – Mr & Mrs A<br />Both aged 61<br />Both in good health & non smokers<br />Mr A – BP Pension Scheme – final salary pension in payment - £18,000 p.a.<br />Benefit on death - £15,000 p.a. (83%)<br />CETV - £300,000<br />Actuary advised share to be 63%:37% in Mrs A’s favour to equalise gross pension of £7,000 each.<br />No shadow membership available<br />
Case Study 1 – Mr & Mrs A<br />Clients did not divorce but separated<br />Mr A retained his higher pension<br />Mrs A retained her 83% benefit on Mr A’s demise<br />BP clarified this to be the case (even though legally separated)<br />
Case Study 1 – Mr & Mrs A<br />CETV – poor value <br />Both would have been short changed by a sharing order<br />Novel and innovative solution<br />
Case Study 2 – Mr & Mrs B<br />Both aged 58<br />Both in good health & non smokers<br />Mr B pensions - £1m in 4 different schemes, including an Irish pension<br />Substantial other assets <br />Majority benefits in SSAS including the land Mr A’s business was run from<br />Mrs B - £70k in SSAS and a trustee<br />Actuary advised share to be 54%:46% in Mrs B’s favour rising to 58%:42% ignoring the Irish scheme<br />
Case Study 2 – Mr & Mrs B<br />Clients did divorce<br />Decided to offset all his pensions<br />Pension share in Mr B’s favour for 100% of Mrs B’s SSAS benefits<br />Mrs B resigned as a trustee of SSAS<br />
Summary<br />Difficult market conditions add to complexity<br />Here to help at all stages<br />Trust built up over time<br />
Further information<br />Phil O’Connor is an Resolution accredited Independent Financial Adviser. He is a Certified Financial Planner and holds the G60 qualification enabling him to handle pension transfer cases.<br />This presentation represents our present understanding of current legislation and Her Majesty’s Revenue & Customs practice. <br />Whitewell Financial Planning Limited is an appointed representative of The Whitechurch Network Limited, which is authorised and regulated, by the Financial Services Limited.<br />