pension clinic presentation

8/12/2019 Pension Clinic Presentation

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Presented

by

Graham Moore


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Who we are

Lucas Fettes& Partners

Authorised andregulated by the

Financial ConductAuthority

National Firm ofEmployee Benefit

Consultants

Established 19809 offices in the UK

IndependentFinancial Advisers


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Appointed to deliver pension solutionsfor NCVO members in April 2011

Open to all voluntary organisations

Affinity Group Terms

In partnership


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Overview ofLegislation

Contents

LegalRequirements

Background &

Challenges

Company

Proposition

Next Steps


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Setting the scene


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Facts & Figures

Male aged 65Average life expectancy 20 yrs

Current Basic State Pension - 113.10 2014/15

BSP represents 24% of annual average wage

Females born today4/10100 yrs old

Proposed changes

Proposed Reforms:

Increase in SPA66 from 2020, 67 from 2024/6 & 68 from 2038

Universal fixed rate pension - 144.00 p.w. from 2017

35 yrs NIC required


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What are your plans ?

Will you have to continueworking beyond the SPA?

Wish to retire with sufficientincome?

Consider what you wantto achieve

OR


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Eligibility criteria

Contribution criteria

Commenced October 2012

Automatic Enrolment from staging date

Auto-Enrolment overview

Compliance of regulations

Penalties


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Assessing your workers

Worker type Age band Earnings Enrolment DutyEmployer

Contributions

Eligible jobholders 22 - SPA 10,000+

Must be

automaticallyenrolled

Non-eligible

jobholders

1621 or

SPA74 10,000+

Have a right to opt in

1674 Above 5,772 but

below 10,000

Entitled workers 16 - 74 Up to 5,772 Have a right to join

Mattcan you change this to look like the other slides (see previous)


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Certification

Tier Total Contribution Based on Min employer % Employee %

1 9% Basic pay 4% 5%

2 8% Basic pay* 3% 5%

3 7% All pay 3% 4%

* Providing basic pay represents at least 85% of payroll


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Opting Out and Re-enrolment

Eligible jobholders can opt-out

1 month joining window

Ongoing responsibility tomaintain the enrolment, opt inand out process.

Periodically employers will need

to re-enrol workers

Auto Enrolment in practice


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Over 44,000 schemes (March 2012)

Over 2.0 million pension customers (March 2012)

Range of clients from small employers to PLCs and

across all sectors

One of the most financially secure providers in the

UK

A rated by key rating agency Standard & Poors

About Scottish Widows


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Current Scheme vs New Scheme

Pension Scheme Current New

Clerical Medical

Group Stakeholder Pension

Scottish Widows

Group Personal Pension

Allocation rate 100% 100%

Charges 1.0% AMC

(core funds)

0.57% AMC

(core funds)

Investment choice

- Default investment

32 investment funds

Noneindividual choice

120 investment funds

Balanced Pension Approach

Contributions Employer - 6% of BAS

Personal - voluntary

Employermatched up to 6%

Or

Phased contributions (4 yrs)


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Contributions phased in over 4 year period

Up to to 30 Sept 2017 Employer 1% Personal 1%

1 Oct 2017 to 30 Sept 2018 -Employer 2.5% Personal 2.5%

From 1 Oct 2018Employer 3% Personal 4%

Contributions based on ALL pay

Personal Contributions paid net of basic rate income tax

Annual Contribution allowance 2014/15 - 40,000

Employer contribution of 3% after 4 years

PhasedContributions

Personal minimum contribution of 4% after 4 yrs


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Tax Relief on Personal Contributions

Tax Relief on your contributions

Services provided

Higher rate tax claimed throughself assessment or via coding

Services providedExample: Employee earning 20,000 per annum - initial 1% contribution

Collected via Payrollnet of pay

Monthly payments example

Employer pays 16.67

You only pay 13.33*

Your tax relief 3.34

Total paid in 33.34

*Basic rate tax relief at source


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Investment Attitude to Risk

Risk v ReturnHigh

Low

Low

High

Potential Return

RISK

Cash

Gilts

Corporate Bonds

Property

UK Equities

Global Equities

Regional/Specialist

Emerging Markets

Individual Shares


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Investment Options

Three risk-based Lifestyle options

Adventurous

Balanced (Default)

Online Investment decision maker

Ongoing Governance

Cautious


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Managing investment risk to retirement

Stage 1: 15 years or more to go

Going for growth

Stage 2: 15-5 years to go

Gradual risk reduction

Stage 3: last 5 yearsMaximising tax-free cash + pension

Adventurous Balanced Cautious


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Core Services - Employees

Employee

Memberengagement

Access toadviceOnline

management

Financialeducation


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Leaving Service


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Why save in a Pension

Employer contributions

Tax Relief

Control and Independence

Longevity

Build a retirement fund (replacement for earnings)


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How does it work?

Size of fund depends on:

Term of saving period

Amount of contributions

Investment Choice

Plan charges

Build a Fund for Retirement

Employer Contributions Personal Contributions

Tax Relief


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Choices at Retirement

Retirement Fund

Maximum

Tax Free Lump Sum

25% of fund

Purchase an annuity

(open market option)

Single life

Spouses benefit

Indexation

Alternatives

Phased

Income Drawdown

Third Way


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Potential Annuity Rates

Joint Life, 50% spouse, RPI 3% p.a. no guarantee - 3,379 p.a.

gross

Income from an annuity is taxed as earned income

Single Life, level with 5 yr guarantee - 5,578 p.a. gross

Joint Life, 50% spouse, level no guarantee - 5,250 p.a. gross

Individual Aged 60Pension Fund Value 100,000


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Projection of Benefits


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Joining Process

Policy issued

Log in details for onlineservices

Contractually joined orAuto - Enrolled

Joiner notification issuedIncluding opt out

Policy issued

Log in details for onlineservices

Joiner notification issuedIncluding opt out

AutoEnrolled orExpress an interest in joining

Current members Non members

Consolidation options


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Summary

After Adoption will contribute towards your plan

Low charges and access to a wide range of funds

You need to provide for your retirement

A pension is a tax efficient way of saving

Lucas Fettes provide advice and guidance


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Important Notes

Please note, this presentation has been prepared based on our currentunderstanding of UK taxation, Law and HMRC Practice.

The tax treatment of arrangements varies according to the financialcircumstances of the individual concerned. Past performance is notnecessarily a guide to the future returns and values can go down as well as up.Lucas Fettes & Partners (Financial Services) Limited is an IndependentFinancial Adviser authorised and regulated by the Financial Conduct AuthorityFCA no. 146279.

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