Mr Steel is keen to take pension benefits and consolidate his numerous pension plans. He would also like to set up a family pension to include his 3 children and 6 grandchildren.
- Mr Steel is aged 70 and has a large pension portfolio with a number of providers, worth £400,000.
- Mr Steel continues to receive income from business and has disposable income.
- He is keen to help his children’s and grand-children’s long term futures.
- Some of the children are high earners and some are low earners.
- Mr Steel has three children.
- Transfer pensions into a new “scheme pension” arrangement.
- Draw a tailored pension income based on his health and chosen investment strategy.
- Take maximum pension commencement lump sum (PCLS) (£100,000).
- Invest PCLS into Business Property Relief (BPR) solution (see Case Study IHT 4 and 5).
- Mr Steel to make contributions into scheme pension for children and grandchildren within permitted limits out of excess income.
- When possible/permitted allocate surplus pension funds to other family members.
- Balance of pension fund left undrawn can provide future PCLS and income.
Benefits from advice given:
- Creating a pooled fund enables the family members to invest together in a common investment approach.
- Can choose between a minimum and maximum income level of scheme pension at start.
- Income levels tailored to personal circumstances depending on health.
- Excess income can be invested into pension for children/grandchildren.
- Gains 20%/40%/45% Income Tax relief on pension contributions.
- Reducing Inheritance Tax by amount of pension contribution.
- Can allocate excess growth on the scheme pension to family members.
- General fund can be used to pay fees allowing smaller family member pots to grow without the drag of charges.
- Inheritance Tax saving of £40,000 after two years in BPR investment.
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We will look to carry out a regular review of your circumstances, objectives, needs and portfolio performance to ensure all arrangements continue to be suitable and advise of any changes that may be appropriate.
This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.