technical eye Retirement Income Special Edition

Transcription

1 For professional advisers only technical eye Retirement Income Special Edition Transitional Pension Input Periods Tapered annual allowance Retirement income solutions (the blended approach) Transferring from a Defined Benefit pension scheme to a Defined Contribution pension scheme Pension death benefits and legacy planning part 1 and part 2

2 Welcome Sam Newton Technical Project Manager As we move into a new year we are bringing you this retirement income special edition a collection of our technical articles on pensions. Some of which you may have read on our CanRetire website and some which are completely new. Advisers have had a lot to take on with the changes brought about as a result of the pension freedoms, then the transitional Pension Input Period changes and the tapered annual allowance restrictions for high earners due to come into effect from April We are still waiting for further clarity on how Fixed Protection and Individual Protection 2016 will work. However, HMRC has confirmed that benefits will need to be more than 1m for Individual Protection 2016 to be available. HMRC has also hinted that there may be no deadline in which to apply for these protections although how this will work in practice is anyone s guess. The ability to sell on an existing annuity in the secondary market is due to take effect from April We can also look forward to the publication of the Government s response to the consultation on pension tax relief. Any seismic change to the tax relief system could have major repercussions on how we view pensions going forward and bring with it a whole new set of legislation and accompanying rules for advisers to get their heads around. I hope you enjoy this edition and find it a useful point of reference in your day-to-day business. Any feedback or suggestions are gratefully received at ican@canadalife.co.uk Technical Services Empowering Professional Advisers 02 Technical Eye Special Edition

3 Contents 02 Welcome 04 Transitional Pension Input Periods Following the introduction of the pension freedoms the Chancellor s July Budget also brought about further changes to the rules around Pension Input Periods (PIPs) and restrictions to the annual allowance for high earners. This article looks to explain the changes to PIPs for Defined Contribution pension schemes and how the default and alternative chargeable amounts operate. 09 Tapered annual allowance This article continues to look at the implications of the changes to the annual allowance from 6 April 2016 for those high earners who will find their ability to contribute to a pension restricted. 11 Retirement income solutions (the blended approach) With the new flexibilities introduced as a result of the pension freedoms, the dilemma still exists as to whether guarantees or flexibility should be the way forward. This article examines the possibilities to blend, mix and match products to create a truly blended solution providing both guarantees and flexibility. 16 Transferring from a Defined Benefit pension scheme to a Defined Contribution pension scheme The new pension freedom rules offer members of Defined Contribution pension schemes greater flexibility, but the same cannot be said for members of Defined Benefit pension schemes who may look to transfer. This article looks at the rules and the key planning points that may affect the decision-making process. 20 Pension death benefits and legacy planning Part 1 We revisit the changes to death benefits as a result of the pension freedoms, in terms of the tax treatment and the introduction of two new classes of beneficiary; the nominee and the successor. 22 Pension death benefits and legacy planning Part 2 Should pensions now be used for inheritance tax planning? Are spousal bypass trusts still relevant? In this article we look at the various estate planning opportunities that exist involving pensions and look at the features and drawbacks of the beneficiary s flexi-access drawdown and the spousal bypass trust. Technical Eye Special Edition 03

4 Transitional Pension Input Periods Sam Newton In addition to the pension freedoms that came into effect in April 2015 in his Summer Budget, the Chancellor also announced changes to the annual allowance and Pension Input Periods. From 6 April 2016, the annual allowance will be tapered for high earners and Pension Input Periods will be aligned with the tax year. This means that in future tax years it will no longer be possible to manipulate Pension Input Periods (PIPs), however, opportunities still exist for some clients to make additional contributions into their pension, which in total may be larger than the original 40,000 allowance. Pension Input Periods (PIPs) PIPs are a measure of the amount of contributions made to an arrangement within a tax year. The old rules (recap) PIPs did not have to align with tax years. Could be shorter or longer than 12 months (although first PIP could not be longer than 12 months). Could not have two PIPs for the same plan ending within the same tax year. The transitional rules As part of the transitional rules, the 2015/16 tax year has been split into two mini tax years, which fall on either side of the 8 July These are referred to as the pre-alignment and post-alignment tax years. For Defined Benefit schemes the PIP for the pre- and post-alignment tax years will be a proportion of the combined amount (which is not covered in this article). 04 Technical Eye Special Edition

5 Consequences Any existing arrangements, as a consequence of the Chancellor s speech, may now have two or three PIPs ending in the same tax year (2015/16). For example, where an individual closed their PIP early and started next year s PIP in this tax year (which would otherwise have ended in the following tax year), these would now fall within the current tax year. It is also possible to set up a third PIP from 9 July which would also end in the current tax year. As a result, all remaining PIPs will now be tested against the 15/16 tax year and the annual allowance has been increased to 80,000 to make allowance for this. Therefore pension contributions made during this tax year up to 80,000 can be protected against an annual allowance tax charge. New arrangements commencing on/after 6 April 2016, will have a PIP that aligns with the tax year, where the 40,000 annual allowance will apply again (except where the tapered annual allowance applies). Annual allowance recap The annual allowance is the level of tax relievable contributions an individual can make to a pension plan without facing a tax charge. The annual allowance was originally set at 40,000 for the 2015/16 tax year. Defined Contribution transitional rules All PIPs that were currently open on 8 July 2015 were closed on that day. For new arrangements (on/after 9 July 2015), the first PIP will start at their commencement date and end on 5 April From 6 April 2016; All PIPs will be aligned with the tax year (6 April 5 April). PIPs can no longer be shorter or longer than a tax year. Example Full 80,000 used in pre-alignment year The scenario below illustrates that the full 80,000 has been used in the pre-alignment tax year and so there is no transitional carry forward available for the post-alignment tax year. Any contributions up to 80,000 made between 6 April 2015 and 8 July 2015 would be protected under the extended annual allowance. In addition, any unused annual allowance from the previous three tax years could also be carried forward to the 2015/16 tax year. PRE-ALIGNMENT 08 July 2015 POST-ALIGNMENT 06 April April 2016 UP TO 80K Pre-alignment tax year All PIPs (open or ending) between 6 April July 2015 The annual allowance will be 80,000; plus Any unused carry forward from previous three tax years Post-alignment tax year The full transitional annual allowance of 80,000 has been used up in the pre-alignment year. Therefore, none is available to carry forward to the post-alignment tax year. Technical Eye Special Edition 05

6 Example 40,000 available to carry forward from pre-alignment year The scenario below illustrates that the full 40,000 unused allowance from the pre-alignment tax year is available to carry forward into the post-alignment tax year. Up to 40,000 of the pre-alignment mini tax year can be carried over to the post-alignment tax year in addition to any unused annual allowance carried forward from the previous three tax years. As only 40,000 had been made between the 6 April 2015 and 8 July 2015, there is scope to carry the full additional 40,000 from the pre-alignment tax year into the post-alignment tax year. The total contribution for the tax year as a whole will be within the 80,000 limit for the transitional year. PRE-ALIGNMENT 08 July 2015 POST-ALIGNMENT 06 April April K UP TO 40K Pre-alignment tax year PIP ending between 6 April July 2015 The annual allowance used is 40,000; plus Any unused carry forward from previous three tax years Post-alignment tax year New PIPs (starting after 8 July 2015) ending between 9 July April 2016 The annual allowance is zero; but Can carry forward up to 40,000 unused from pre-alignment tax year; plus Any unused carry forward from previous three tax years Money Purchase Annual Allowance (MPAA) recap Once benefits are taken under the new flexibilities, these events will trigger the MPAA rules. Trigger events: Taking an UFPLS (Uncrystallised Funds Pension Lump Sum) Taking an income from a flexi-access drawdown Taking income from a fixed term annuity Taking income from a flexible lifetime annuity Converting a pre-capped drawdown to flexi-access drawdown and subsequently taking an income Exceeding the income limits within a capped drawdown fund Receiving a stand-alone lump sum where there is primary protection in place and the lump sum protection is in excess of 375,000. Where benefits have been flexibly accessed, through one of the trigger events, an individual s defined contribution annual allowance reduces to 10,000. However, they still retain an alternative annual allowance in relation to any non-dc pension benefits, which is up to 30,000, where the full 10,000 MPAA has been used up. Default or alternative? Where an individual is contributing to both types of scheme, there are two calculations to determine whether or not there is a charge. DEFAULT CHARGEABLE AMOUNT ALTERNATIVE CHARGEABLE AMOUNT = - DC + DB Pension Inputs 40K + Carry forward of unused AA DB 30K + DC = - Pension Carry forward - Input of unused AA Pension Input The higher of the two calculations will determine whether or not there is a charge and the amount of that charge. Therefore, in the example above, the chargeable amount is the higher of the default and alternative chargeable amount. Example Let s assume that an individual has paid 25,000 into a DB scheme and 15,000 into a DC scheme since flexibly accessing benefits. Ignoring any carry forward of unused allowance. DEFAULT CHARGEABLE AMOUNT The alternative chargeable amount is higher and therefore applies to the 5,000. Looking at the two calculations, we can see that the alternative chargeable amount provides the higher figure. Therefore, this will be the charge that applies. 10K + MPAA {(DB 25,000) + (DC 15,000) = 40,000} 40,000 ZERO = - = ALTERNATIVE CHARGEABLE = (DB 25,000 30,000 = 0) + (DC 15,000 10,000) 5,000 = AMOUNT 06 Technical Eye Special Edition

7 MPAA transitional rules The following scenarios illustrate where the trigger event occurs in the pre-alignment tax year. Example: Split into two mini tax years (the full 80,000 used in the pre-alignment year) The scenario below illustrates that the full 80,000 has been used in the pre-alignment tax year and so there is no transitional carry forward available for the post alignment tax year. Here, they have fully utilised two tax year s alternative annual allowance (the allowance for inputs other than the MPAA) and money purchase annual allowance, making an overall total of 80,000 made between 6 April 2015 and 8 July 2015 which would be protected under the extended annual allowance. In addition, any unused annual allowance from the previous three tax years could also be carried forward to the 2015/16 tax year. PRE-ALIGNMENT 08 July 2015 POST-ALIGNMENT 06 April April 2016 UP TO 60K UP TO 20K AA MPAA Pre-alignment tax year PIP ending between 6 April July 2015 Alternative annual allowance 60,000 MPAA 20,000; plus Any unused carry forward from previous three tax years Post-alignment tax year The full transitional annual allowance of 80,000 has been used up in the pre-alignment year. Therefore, none is available to carry forward to the post-alignment tax year. Example: Split into two mini tax years (only 40,000 used in the pre-alignment year) The scenario below illustrates that the full 40,000 unused allowance from the pre-alignment tax year is available to carry forward into the post-alignment tax year. Up to 40,000 of the pre-alignment mini tax year can be carried over to the post alignment tax year in addition to any unused annual allowance carried forward from the previous three tax years. Here, only 30,000 of the alternative annual allowance has been used up and 10,000 of the money purchase annual allowance, giving an overall total of 40,000 between the 6 April 2015 and 8 July Therefore there is scope to carry the full additional 40,000 from the pre-alignment tax year into the postalignment tax year. Therefore up to 10,000 could be made into a DC scheme and up to 30,000 into a DB scheme, providing for a total contribution, for the tax year as a whole, of 80,000 (which is within the limit for the transitional year). PRE-ALIGNMENT 08 July 2015 POST-ALIGNMENT 06 April April K 10K AA MPAA Pre-alignment tax year PIP ending between 6 April July 2015 Alternative annual allowance 30,000 MPAA 10,000; plus Any unused carry forward from previous three tax years 30K 10K AA MPAA Post-alignment tax year PIP ending between 9 July April 2016 Annual allowance is zero; but Can carry forward up to 30,000 alternative annual allowance from pre-alignment year and 10,000 for the MPAA; plus Any unused carry forward from previous three tax years Technical Eye Special Edition 07

8 Carry forward recap Carry forward allows an individual to carry forward unused annual allowance from the previous three tax years An individual first uses up their allowance in the current tax year and then from the previous three tax years in order of the furthest tax year first An individual must have been a member of a registered pension scheme during those tax years Therefore allowing an individual to make contributions in excess of the 40,000 annual allowance limit Individuals must have relevant earnings in the tax year to cover the size of any contribution made by them. Carry forward inc transitional year Carry forward will continue to apply beyond the 2015/16 tax year. The two mini tax years will be treated as one tax year for carry forwards purposes, where the value will be based on the pre-alignment tax year of 80,000 (with a maximum of 40,000 that can be carried into future tax years). For three tax years after 2015/16: 16/17: 13/14, 14/15 & pre-alignment tax year 17/18: 14/15, pre-alignment tax year & 16/17 18/19: pre-alignment tax year, 16/17 & 17/18 Opportunities There is an opportunity for some individuals to maximise pension contributions in this tax year by up to an additional 40,000, which could benefit: Those looking to make large contributions, before applying for fixed protection against reduction in lifetime allowance from April 2016 Those being partly or fully remunerated in the form of dividends who wish their employer to utilise any unused allowance on their behalf, subject to the wholly and exclusively rules Those due to retire who wish to top up their pension fund prior to taking benefits Those high earners that will be affected by the tapered annual allowance from April 2016 Those looking to make one off large contributions to mitigate tax on other non-pension assets or to regain all/part of any allowances or means tested benefits. wesay The transitional PIP rules will give some individuals the opportunity to pay more money into a pension than would have been the case had the rules not been introduced. With the introduction of the tapered annual allowance from April 2016 for high earners, this may be the ideal time to make additional pension contributions. 08 Technical Eye Special Edition

9 TAX CHARGES The Tapered Annual Allowance Sam Newton The Chancellor s Summer Budget announced the introduction of the tapered annual allowance for those high earners with adjusted incomes over 150,000 to take effect from 6 April Tapered annual allowance from 6 April 2016 The tapered annual allowance has been designed to reduce the annual allowance for individuals with adjusted incomes over 150,000. This will reduce the annual allowance by 1 for every 2 of income above 150,000. A maximum reduction of 30,000 applies and therefore for individuals with incomes of 210,000 or over, their annual allowance will have essentially been reduced down to 10,000. There are two income limits used to measure whether the tapered annual allowance will apply to an individual or not. The first is the threshold income, which is set at 110,000. If an individual s income is above this amount then they will have their adjusted income tested and where this exceeds 150,000, the tapered annual allowance will apply. It will be important to understand which types of income are considered when looking at the threshold income and adjusted income. Threshold income This is basically gross income less allowable deductions. This will include: Any income given up through salary sacrifice All non-savings, savings and dividend income Technical Eye Special Edition 09

10 It will not include: Any employer or personal pension contributions Any death benefit received (including those subject to marginal rates of tax, for example post 75) The best way to illustrate this is with an example. Example - Caroline Is employed on a salary of 80,000 Is a member of employer s Group Personal Pension (GPP) scheme Contributions paid using salary sacrifice arrangement In 2016/17: Caroline sacrifices 10,000 into her GPP (presacrificed salary is 90,000) Her employer makes an additional contribution of 5,000 She also receives 1,000 gross savings interest and 2,000 gross dividend income She received her late father s pension plan (who passed away at the age of 81) as a lump sum death benefit which she paid tax on at her highest marginal rate Therefore, Caroline s threshold income will be 93,000: (Gross income from all sources) + (any pre-sacrificed salary) ( 80, , ,000) + ( 10,000) = 93,000 Caroline s threshold income is below 110,000 Therefore no adjusted income calculation is required If Caroline s threshold income had been 110,000 or over, then she would have been subject to the adjusted net income test and her employer s pension contribution would have been factored into the calculation. Adjusted income Like threshold income, it is also gross income less allowable deductions. This will include: All employer pension contributions All personal pension contributions made under net pay arrangement All non-savings, savings and dividend income Example - Nathan Is employed on a salary of 140,000 Is a member of employer s occupational money purchase scheme Contributions paid using net pay arrangement In 2016/17: He contributes 20,000 to pension scheme His employer matches his contribution of 20,000 He also receives 2,000 gross savings interest and 10,000 gross dividend income Therefore, Nathan s adjusted income will be 192,000: (Gross income from all sources) + (employers + employees pension contributions) ( 140, , ,000) + ( 20, ,000) = 192,000) Nathan s annual allowance will be reduced by 21,000: ( 192, ,000) / 2 = 21,000 Therefore Nathan will have an annual allowance of 19,000: ( 40,000 less 21,000) = 19,000 Conclusion There are opportunities to make large contributions to pension schemes within this tax year, as a result of the increase to the annual allowance and a sense of urgency for those who will see their annual allowance reduce from next tax year. wesay With the tapered annual allowance due to come into effect from 6 April 2016, it may be worth taking advantage of the existing annual allowance and making tax relievable pension contributions before the restrictions are introduced. It will not include: Personal pension contributions made under relief at source Any death benefit received (include those subject to marginal rates of tax, for example post 75) The best way to illustrate this is again with another example. 10 Technical Eye Special Edition

11 Retirement income solutions (the blended approach) Sam Newton With the introduction of the pension freedoms back in April, there is now much more choice and, where prior to the changes one solution in most cases prevailed, there are now many more opportunities for a multi-product solution. One product solution In many cases, it is clear what is needed to meet a client s objectives. For example, some clients may simply want a guaranteed income for life and a lifetime annuity will probably be the most suitable product to meet that objective. Others will want complete flexibility, in which case it could be argued that flexi-access drawdown will best meet that need. What risks do clients face? However there are a number of risks clients face in retirement. Depending on which route they choose, they may face one or more of the following; Investment risk In the accumulation phase, the investment decision may be simplified in the form of a risk rated fund which is diversified into various sectors, for example a balanced fund. Clients may also invest in lifestyle funds or target date funds that look to de-risk up to their retirement date or within a range of 3-5 years of a selected retirement date. However, with the recent changes clients may no longer want to fully de-risk at retirement, especially where the intention is to remain invested with all or part of their fund. There is also the issue of what to invest in once at the decumulation stage. Should this still be a balanced fund, an income fund or maybe something else? Clients may wish to take an income from the fund but they may also want some certainty that the fund can sustain any required level of income taken and possibly also produce some additional growth. Technical Eye Special Edition 11

12 Longevity risk Where a client intends to remain invested and draw an income there is the issue of longevity, or in other words, the risk that the fund doesn t continue to maintain the required income or worse that the fund completely runs out. Even where a client invests in an annuity, although there is a guarantee that the annuity will pay until the annuitant s death, there is no guarantee that the income will be sustainable. This is especially the case where there is no escalation or indexation or where the client s living costs go up significantly maybe due to illness or additional care needs. Example (fully retiring at 55) In this example, the client is looking for a secure income of 11,000 each year but does not want to have to purchase the full amount using an annuity. The state pension will be around 6,029 but this won t kick in until the client reaches 67. The client also wants to maintain a level of flexibility and investment growth and would like a flexible income in addition to their fixed income requirements. 40k Blended solution guarantees and flexibility Inflation risk Again, and especially with annuities, there is the risk that inflation erodes any guaranteed fixed income. This can also be the case where income is being produced by a drawdown investment which is invested in a lower risk fund. 30k 20k 10k Flexi-Access Drawdown 7% Yield Fixed Term Annuity Lifetime Annuity State Pension 13,000 27,000 5,000 6,029 Annuity/interest rate risk Interest rates are at record lows and some would argue that this cannot continue indefinitely. For some, an annuity may be the most suitable option but what happens when interest rates increase and a better deal could have been had? Although the government has announced that it intends for existing annuities to be sold on a second hand market, this will no doubt have additional costs. The blended solution This is where a blended approach may be the most suitable way forward. GUARANTEES Lifetime Annuities Fixed Term Annuities Blended Solution FLEXIBILITY Flexi-Access Drawdown UFPLS As mentioned earlier, for many clients a one-product solution may be the best option but for many others a blended approach may be the best way forward. The blended approach may suit clients that; Are looking for a mix of guarantees and flexibility. Are faced with changing income requirements but also need guarantees. Are looking to wind down their retirement in stages. 55 As the client s intention is to fully retire at 55, they can meet all their objectives by combining more than one product: Flexi-access drawdown - provides potential for investment growth and a potential hedge against inflation flexibility. Also flexibility for additional or ad hoc income. Lifetime annuity provides part of the required lifetime guaranteed income and eliminates longevity risk. State pension provides the rest of the guaranteed lifetime income requirement. Eliminates longevity risk and inflation proofing (although this may change in the future). Fixed term annuity provides a bridging income until the state pension comes into effect, then provides a guaranteed maturity value to reinvest. Providing flexibility and a hedge against interest rate/annuity risk as only for a set term In this scenario, 11,000 secured income is guaranteed (a lifetime annuity combined with fixed term annuity that provides a fixed income until age 67, where it then provides a guaranteed maturity value. The income is then replaced by the state pension) and a variable income from the flexi-access drawdown between 13,000-27,000 depending on the size of the fund. 12 Technical Eye Special Edition

13 40k 30k 20k 10k 55 Example (retiring in stages from age 60 onwards) In this example, the client at age 55 is fully invested in a personal pension and is still in full time employment. At age 60, the client looks to reduce their hours at work but still wants to replace some of those lost earnings on a temporary basis. At age 67, they are looking to take all their remaining tax-free cash from their pension and move the remainder of the fund into drawdown to target a flexible income. Blended solution guarantees and flexibility Full time Earnings Pension Plan Remains invested (UFPLS available) Fixed Term Annuity Part time earnings Flexi-Access Drawdown 7% Yield Lifetime Annuity State Pension ,000 27,000 6,000 6,029 In this scenario, at age 60 the client partially retires and their earnings reduce, using a fixed term annuity to make up some of the difference. At state pension age, a lifetime annuity is purchased and combined with the state pension provides a guaranteed minimum income, while the remainder of the fund moves from the pension plan to a drawdown plan, releasing the remainder of the tax-free cash and providing complete flexibility in terms of income. Also at this age the state pension comes into effect and the member wants to top up this guaranteed income with a lifetime annuity. Again this member wants the security of a guaranteed income but with the flexibility to take more money as and when required with the potential for investment growth. As the client s intention is to partially retire at 60, he can meet all his objectives by combining more than one product: Personal pension plan provides the ability to consolidate more than one pension plan benefiting from reduced charges and one investment strategy. There is also the flexibility to take ad hoc income in the form of Uncrystallised Funds Pension Lump Sums (UFPLS) or tax-free cash and either an annuity or drawdown. Depending on the investment strategy, they may be able to mitigate both interest rate and inflation risk. Flexi-access drawdown provides potential for investment growth and a potential hedge against inflation with the added benefit of flexibility for additional or ad hoc income. Lifetime annuity provides part of the required lifetime guaranteed income and eliminates longevity risk. State pension provides the rest of the guaranteed lifetime income requirement. Eliminates longevity risk and inflation proofing (although this may change in the future). Fixed term annuity provides a bridging income (after any tax-free cash at outset is taken) to supplement their part time earnings until they fully retire at age 67. At which point it then provides a guaranteed maturity value to reinvest. Providing flexibility and a hedge against interest rate/annuity risk as it s only for a set term. Technical Eye Special Edition 13

14 Product options (on death) Guaranteed Lifetime Annuities Fixed Term Annuities Increased options around death benefits In both the examples, we have not covered any objectives in relation to death benefits, but again, by combining more than one product it is possible to provide a number of different options on death. For example, a combination of annuities and drawdown could provide a joint guaranteed income for life for a spouse in respect of the annuity, while at the same time providing a flexible income or lump sum for other nominees (who may or may not be family members) in respect of a beneficiary s drawdown or pension lump sum death benefit. The table below illustrates how a combination of products can also provide a range of death benefits. Secure income for life for a spouse, dependant or nominee Objectives death benefits Flexible income Lump sum guaranteed Flexi-access 3 3 Personal Pension Plan Temporary guaranteed income Finally, there are innovations being made all the time. It may be possible to incorporate deferred annuities into the mix, allowing a client to purchase a hedge against longevity risk that doesn t kick in until age 85, say. Therefore the client has the flexibility to manage the rest of their pension pot in line with their objectives while secure in the knowledge that should it run out that an annuity will be payable from a selected age in the future. Investment linked annuities may also offer a solution that combines or blends more than one approach, allowing greater flexibility and investment growth while providing an income for life. Conclusion/summary In the new pension world, the blended solution can offer clients the flexibility and guarantees they require while still meeting their desired level of risk and capacity for loss. Even in situations where death benefits play an important part in the client s objectives, it can still be possible to provide varying death benefits for different family members, where it may be a secure income that is desired for a spouse and lump sums for adult children or total income flexibility. The blended solution is another option advisers should consider for clients with multiple or changing or conflicting retirement needs. wesay Using a combination of guarantees, mixed with flexibility allows for conflicting objectives to be met in a blended solution including mitigating the main types of risks involved in pensions, for example, inflation, investment and longevity risk. Additional advantages could include being able to blend possible death benefits to suit different family members, for example a joint life annuity to provide an income for a spouse, while a beneficiary s drawdown could be left to children or grandchildren. 14 Technical Eye Special Edition

15 NOW HE CANRETIRE With our full range of flexible options, you can mix, match and blend the right solution to help him retire with confidence We understand that every client s needs are different, so we offer flexible options clients can mix and match, without sacrificing the importance of value for money. Plus, you can look forward to our smooth, drama-free, awardwinning service and our dedicated ican Technical Services Team who offer extra support. Meaning almost everyone could find what they re looking for. For more on how your clients CanRetire visit CanRetire.co.uk or contact our dedicated team at adviser.support@canadalife.co.uk or on Technical Services Empowering Professional Advisers

16 Transferring from a defined benefit (DB) scheme to a defined contribution (DC) scheme Nigel Orange As a result of pension freedoms, some with defined benefit (DB) pensions will want to consider transferring to make the most of the new options available. However, giving up guarantees requires expert advice and a cautious approach. Many individuals are asking questions about transferring their DB scheme benefits into more flexible pension arrangements. So where does the adviser stand in transacting this type of business? The Government has published a number of requirements detailing how they expect advisers, firms and trustees to deal with this business? Government and Regulators position Safeguards are being introduced to protect both individuals and pension schemes in relation to DB to DC transfers. A new requirement is for the member to confirm to the trustees/managers that appropriate independent advice from an authorised independent adviser regulated by the Financial Conduct Authority (FCA) has been given before a transfer can proceed. Confirmation must be given in writing from the authorised adviser firm that appropriate independent advice has been given to the member/survivor and the trustees/managers of the originating scheme must check on the FCA website that the adviser confirming advice is properly authorised to conduct pension transfer business. An exception to this is where the transfer value is less than 30,000, in which case independent advice is not a requirement. The Pensions Regulator (TPR) issued a consultative document DB to DC transfers and conversions in February 2015 which was the first part of a package of communications to help trustees prepare for major pension reforms. 16 Technical Eye Special Edition

17 This consultation reflects the relevant provisions of the Pension Schemes Act It provided comprehensive guidance to enable trustees to put in place processes to manage the new flexibilities. These processes deal with the position of the trustee, the member and the scheme. For a firm to engage in advising on transfers and opt-outs, specific FCA permission is required; without this permission the firm cannot give advice on transfers. Any advice must be given or checked by a pension specialist. Any such specialist must follow the FCA s training and competency rules and have the required level of qualifications. The onus is now on the trustees/managers of the pension arrangement to check and it is they who cannot proceed with the transfer unless the requirements have been fulfilled. Taxation changes All dependants pensions paid from drawdown as a result of the member dying before the age of 75 are tax-free. All joint-life pension annuities paid as a result of the member dying before the age of 75 are also tax-free. However, there is no change to dependants pensions paid from DB schemes and these remain taxable. This tax treatment does create an uneven playing field and could itself become a reason for transferring. There are some basic rules that apply to any individual considering a transfer from DB to DC pension including: Take great care before leaving a DB scheme. Seek professional advice; this is a regulatory requirement if the transfer value is 30,000 or greater. Avoid and be aware of pension transfer scams. Consider carefully any enhancement to leave a DB scheme a recent FCA review found one-third of those looked at had caused concern. Consider the risk, if any, of transferring to a DC scheme and giving up guaranteed benefits. Consider the risk, if any, of staying in a DB scheme. To consult others that may be affected by the transaction, for example, spouse, family members, solicitors. Consider their tax position. Professional adviser requirements Advisers have to be independent and authorised by the FCA. DB transfers of 30,000 or more where benefits are being accessed must be dealt with, or checked by, a pension transfer specialist. Advisers need to know the individual s personal and financial circumstances, together with their attitude to risk. Advisers should carefully compare all the benefits and in particular guarantees that are being given up in the DB scheme with those gained in the new DC scheme. Advisers might consider the DB scheme funding level and to whether any benefits and the transfer value might be reduced. It might be relevant to take into account the financial position of the sponsoring employer. The advantages and disadvantage of both types of scheme. A DB to DC pension needs careful consideration and documentatary evidence to support a transfer. In most situations it will be more beneficial in the long term to stay in a DB scheme rather than transfer. This is the opinion of the FCA, providers and advisers. DB schemes are often referred to in the press as gold plated pensions. However, the opportunity to take advantage of the new pension reforms is likely to alter the balance in this debate at least for some individuals where increased flexibility is more important and fits with their personal circumstances. Trustees DB scheme trustees have a duty to act in the members best interests. When considering transfers they must balance the interests of both the members wishing to transfer and those that wish to remain in the scheme. Trustees will have to ensure that processes are in place to: Implement a likely increased number of transfers in a timely fashion and in accordance with legislative deadlines. Trustees can apply to TPR for an extension if needed. Maintain accurate records. Support members in a number of ways to make fully informed decisions. Monitor and understand demand for transfers and the subsequent impact those transfers could have on scheme funding. Ensure that appropriate independent advice has been taken where the transfer value is 30,000 or more. The trustees do not, however, have to concern themselves with the actual advice given. Conduct proper due diligence on the receiving scheme to ensure that it is a legitimate arrangement. Ensure members are kept informed of legislative and scheme changes. For full details of the actions and processes identified by The Pensions Regulator please refer to Technical Eye Special Edition 17

18 Case study 1 Tanya is 55 and divorced with two grown up children. She has a small mortgage of 5,000 still outstanding but also has credit card debt, from the period following her divorce, of some 15,000. It is this debt that she is struggling with as apart from this Tanya is financially sound with a full-time job that she enjoys. Her two nondependent daughters both have jobs but are finding it impossible to move from rented accommodation onto the property ladder. DC PENSIONS 15, ,000 20,000 Tanya has little in the way of investment but has a deferred DB pension with a transfer value of approximately 98,000. The pension is payable at age 62 with a significant actuarial reduction for early retirement before the scheme pension age. At the time of divorce both parties had similar levels of pension benefits and therefore no judgements were made against these. Tanya is fully aware that the starting position for DB pensions is that in the long term it is generally more beneficial not to transfer but she is aware that when her elderly parents die she, as the only child, will inherit their house. Her parents are asset rich, cash poor and therefore unable to provide any immediate help. Tanya is desperate to pay off her mortgage and credit card debt and also to give some support to her children to get onto the property ladder. Her first step is to seek advice from a professional adviser who specialises in pensions. The adviser meets with Tanya to gain a full understanding of her personal, family and financial situation. The adviser also seeks information from the defined benefit scheme as to its funding position and whether the transfer value has been reduced. The adviser feels that by taking advantage of the pension reforms Tanya may be able to achieve her aims but this would need careful thought and analysis. However, the adviser also points out to Tanya that if she were to die before or after she took any benefits from the DB scheme her children would not receive any lump sum or pension. This concerns Tanya. By transferring the 98,000 to a DC scheme it would be possible to take a tax-free lump sum of 24,500. This would in turn mean that Tanya could pay off both her remaining mortgage (there is no penalty charge in doing this) and her credit card debt. Tanya would also wish to drawdown a further 20,000 and fully understands that because of her income level of 20,000 pa this would be taxed at her marginal rate of 20%. This net 16,000, together with the 4,500 remaining from the tax-free lump sum, Tanya would split between her daughters to hopefully help them each get a mortgage. Tanya could then leave 53,500 invested in her pension fund. If Tanya should die early this fund should pass to the daughters. Tanya s adviser carries out the necessary transfer value analysis and points out what she would be giving up by transferring her DB pension. The adviser does have concerns about Tanya relying on a future inheritance and for some comfort asks to see her parents will. Tanya also points out that she is planning on down-sizing in about five years time which should release something in the range of 150, ,000. The adviser completes his analysis and writes his report for Tanya to consider. He carefully reiterates what they have already discussed. Tanya fully takes on board his comments but decides to transfer, crystallise her fund and take a payment of the tax-free cash together with a further taxable 20, Technical Eye Special Edition

19 Case study 2 Max is 58 and widowed and works a few days consultancy each week. He has two grown up sons: one has prospered, has a good job and lives with his wife and children in a nice house. His other son, whilst enjoying life, has not found things as easy. Max was employed throughout his working life in the investment world and enjoyed high pay and benefits. As a result he has considerable investments. Max has been thinking about his deferred DB pension. This is payable from age 65 although he could take it early subject to an actuarial reduction. He is concerned that once it becomes payable the benefit will be lost upon his death as he no longer has a wife; he wants benefits to pass to his two sons. DB PENSIONS SPOUSE ONLY DC PENSIONS INCOME OR LUMP SUM TO ANY BENEFICIARY Ideally Max would like to pass some cash benefit to his sons; Max plans to use his investments to fund his own retirement but does not want to bite into any of the capital which is tied up. Max s part-time consultancy currently provides the income he needs and this is likely to continue for a number of years. An option would be for Max to transfer his DB scheme benefits to a DC arrangement. This would then allow him to take 25% as a tax-free lump sum, to pass to his sons, and leave the balance invested. Nominations can be arranged so that upon Max s death the remaining funds should pass to his sons free of tax if death occurs before age 75. Max consults with his professional adviser who is fully aware of his personal, family and financial situation as well as his existing inheritance planning. The adviser carries out a full review of the DB scheme and prepares a report that includes a transfer value analysis (TVA). In most situations it is more beneficial in the long term to stay in a DB scheme rather than transfer but in Max s case the outcome is not so clear cut. The issue of the death benefit is the crux of the matter and on balance the adviser recommends that Max should transfer to a SIPP. The size of Max s other significant investments helps the adviser come to this decision. The transfer is initiated and Max shares the 25% tax-free lump sum between his sons, leaving the balance invested in the SIPP. wesay Some clients will want to benefit from the new pension freedoms and want to move their pension fund into a DC environment; however this may not be in their best interests, being caught up in the desire to release pension benefits. Advisers need to ensure that they complete a full review, explain the issues and carefully document any recommendations and decisions. Technical Eye Special Edition 19

20 technical eye Pension Death benefits and legacy planning Part 1 Sam Newton With the introduction of the pension freedoms back in April the rules around death benefits were changed in terms of the tax treatment and the flexibility, as to whom benefits could be left to. These changes have opened up the opportunities for IHT planning and put into doubt the relevance of the Spousal Bypass trust. The first part of this article looks at the new rules around pension death benefits from uncrystallised and crystallised funds including both drawdown and annuities. Death benefits the new rules How death benefits are treated for tax purposes is now determined by whether the death of the member occurred before age 75 or at age 75 or over. Whether or not benefits have been crystallised or not is no longer a factor in terms of how any death benefit will be taxed. As the diagram below illustrates, where the member dies before age 75 any benefit is paid tax-free, however where the member dies at or after age 75 any UNDER 75 UNCRYSTALLISED CRYSTALLISED UNCRYSTALLISED CRYSTALLISED Pension FlexiAccess Drawdown Pension FlexiAccess Drawdown TYPE OF FUND TYPE OF DEATH BENEFIT 75 & OVER Lump Sum Income TAX CHARGE Lump Sum TAX-FREE Income Lump Sum Income Lump Sum Income 45%* Marginal rates 45%* Marginal rates *45% for 2015/16 Marginal rates future tax years 20 Technical Eye Special Edition

21 UNDER & OVER TYPE OF FUND CRYSTALLISED Lifetime Annuity CRYSTALLISED Lifetime Annuity TYPE OF DEATH BENEFIT Lump Sum Capital protection Guarantee Income Any remaining guarantee period Lump Sum Capital protection Income Any remaining guarantee period (under 30k paid as lump sum) Joint life annuity income Guarantee (under 30k paid as lump sum) Joint life annuity income TAX CHARGE TAX-FREE 45%* Marginal rates *45% for 2015/16 Marginal rates future tax years benefit is taxable on the beneficiary at their rates of tax for income and at 45% for lump sums. However, this will also be payable at the beneficiary s marginal rates from April One significant change to the rules is the ability to nominate anyone as a beneficiary on death and it is no longer restricted to a dependant, normally a spouse or children of the member. This provides more scope to plan for inter-generational estate planning. Members can now nominate anyone to inherit their pension benefits and those nominees in flexi-access drawdown can also leave any remaining benefits to a successor on their subsequent death. From a tax perspective, how these benefits are treated is determined by the age at death of the last person to be in control of them. So this would be the member initially, then either a dependant or nominee, followed by subsequent successors. Therefore these benefits have the potential to fall in and out of tax for HMRC purposes. For example, if the member dies on or after their 75 birthday and they nominate their spouse to receive their flexi-access drawdown benefit, this benefit will be taxable at their spouse s marginal rates. However, if the spouse then dies before they reach age 75 their nominated successor would then receive this benefit tax-free and so on. These rules do not only apply to pensions and drawdown but also now apply to annuities as the diagram above illustrates. Annuities can now provide unlimited guarantee periods, which under 30,000 can be paid out as a lump sum. Joint life annuities and any attaching guarantee period can include anyone and not necessarily a dependant. Whether the solution is a single product or multi product solution, it is important to understand how death benefits are treated for tax purposes and the different options available. The next step for many clients and their advisers is deciding on a legacy planning strategy and this will be the subject of part two of Pension death benefits & legacy planning. wesay With changes to the rules around pension death benefits and the introduction of the nominee and successor as new types of beneficiary, there is scope to pass pension funds to future generations, potentially in a tax efficient manner. Technical Eye Special Edition 21

22 Pension Death benefits and legacy planning Part 2 Sam Newton Legacy planning The changes to pension death benefits have created a number of opportunities around using pension planning as part of an estate planning exercise. The second part of this article will look at the benefits and drawbacks of using spousal bypass trusts and beneficiary s drawdown, as well as other opportunities for using pension planning to mitigate inheritance tax (IHT). The flexi-access drawdown approach The new rules allow more flexibility for clients to structure the death benefits payable in a number of ways for different family members. For example, any drawdown benefits could be left invested for children or grandchildren, which on death could provide either a tax-free or taxable income. Even where the income is potentially taxable by only taking income out within the personal allowance, where the family member has no or very little UK earnings it can be paid out tax-free. However, a potential drawback to this option, is where the member s intention is to provide for more than one generation, but the entire drawdown fund is exhausted by the first beneficiary/recipient. The deceased member has no control over what happens to the benefit once it is paid to the nominated beneficiary and even though the member will have expressed a wish as to whom any benefit should be left to, final decisions over who receives the benefit rests with the trustees or scheme administrator of the pension plan. This is where a spousal bypass trust may be more suitable than completing a simple expression of wish document. However, with the favourable changes to the tax treatment of drawdown funds is a spousal bypass trust still viable? Are spousal bypass trusts still relevant in the post freedom world? It could be argued that pre 75 benefits are taxfree so why would you want to put it into a taxable environment. Secondly, at or after 75 it would be paid into the trust net of 45% tax as a lump sum. From 6 April 2016, this would be at the recipient s marginal rate of tax being a discretionary trust this would also be at 45%. However, it can provide a higher degree of control for the original member in that they can set the remit and pick the trustees. In addition, income can still be provided as tax-free loans to beneficiaries, payable out of the trust. Any income paid out to beneficiaries is net of 45% tax, although any tax can be reclaimed by the beneficiary if more than their existing rate. Also, capital gains above the annual exemption are taxed at 28%. 22 Technical Eye Special Edition

23 So what are the differences between drawdown and spousal bypass trusts? The table below looks at the comparisons between using a spousal bypass trust and beneficiary s flexi-access drawdown for a dependant spouse. Funds Spousal bypass trust Pension trustees/scheme administrator must have discretion and any payment into spousal bypass trust must be paid within two years of member s death. Once in spousal bypass trust, remains out of the spouse s estate for IHT purposes Beneficiary s flexi-access drawdown Pension trustees/scheme administrator must have discretion and any designation to beneficiary s drawdown must be paid within two years of member s death. Remain out of the spouse s estate for IHT purposes Income Option to pay income, capital lump sums or as loans/advances. (Any loans must be paid back out of spouse s estate). Ad hoc or regular but will form part of member s estate once withdrawn from pension scheme. Taxation If member dies; Before age 75 Income paid into trust tax-free with any distribution also tax-free on the beneficiary. At/after age 75 Paid into trust net 45% tax beneficiary can reclaim overpaid tax from the 2016/17 tax year onwards on distributions (the difference between their rate and trust rate). Advances/Loans can be paid out tax-free. Funds subject to periodic and exit charges Income tax and CGT is also payable within the fund. If member dies; Before age 75 Income paid tax-free. At/after age 75 Income taxable at beneficiary s marginal rate. Funds free of income tax/cgt within the fund. Discretion Spousal bypass trustees have discretion once monies are paid into the trust (trustees and remit chosen by the member). Beneficiary has no power/influence as to how much money they can have or take. Future beneficiaries Beneficiary has no power/influence as to whom will benefit after their death. Pension scheme trustees or scheme administrator has discretion as to whom will receive any benefit and type of benefit. Beneficiary, once in receipt of drawdown, can access as much or as little as they want or deplete the entire fund. Future beneficiaries Beneficiary can nominate a successor to inherit drawdown plan on their death. Costs/ Complexity Costs of setting up trust. Annual running costs. Many providers offer standard default trust/ forms. Bespoke trust can be drafted with solicitor although may be costly. Low cost other than provider s annual administrative, product and investment charges. Original product may be too expensive/ sophisticated for beneficiary. Potential to transfer out to cheaper more suitable product. The member s intentions should drive the decision. Where the member intends for the beneficiaries to have complete autonomy over the funds, the drawdown route may be the preferred option. If it is the member s intention to maintain some control on how and when benefits are paid, then setting up a trust may be the preferred option. Cost and tax implications also need to be considered when looking at a trust versus a beneficiary s flexi-access drawdown. As a result of the changes it may well be prudent to have clients review their existing situation in relation to IHT planning, especially where this involves the member s pension plans. Technical Eye Special Edition 23

24 What other ways can a pension be used to reduce a client s estate for IHT purposes? It is possible to reduce a client s estate for IHT purposes while at the same time distributing wealth to other family members. Although your clients may no longer have scope to make pension contributions, for example, where they are at or near the lifetime allowance, they could still make contributions on behalf of other family members. Any contributions made will be treated for tax relief as if the family member made it themselves and not the client making it on their behalf. Where the family member has no earnings, for example if they are a child or not working, they will still be able to receive tax relief on contributions up to 3,600 gross. By taking advantage of the annual 3,000 exemption the client could make an exempt net contribution to another family member s pension plan up to 2,880 net. Where the family member does have UK relevant earnings, they will receive tax relief at their marginal rates up to 100% of their UK relevant earnings. Therefore, the client could make a net lump contribution that fully utilises the family member s annual allowance and any unused annual allowance from the previous three tax years. This has the benefit of building up other family member s retirement provision, which will also be outside the client s and family member s estates for IHT. The family member will receive tax relief at their highest marginal rates and the client gets to reduce the estate liable to IHT. Pension contributions for other family members* = Lump sum used for pension out of client s estate Potential 40% IHT saving CLIENT 32,000 12,800 FAMILY MEMBER/ RECIPIENT = Basic Rate Tax (BRT) 20% Pension contribution 20% Relief Total 20% 32,000 (net) in pension 8,000 40,000 (gross) 8,000 Higher Rate Tax (HRT) 40% = Pension contribution 32,000 (net) 40,000 (gross) 20% Relief in pension 8, % Relief via tax return 8,000 Total 40% 16,000 Additional Rate Tax (ART) 45% = Pension contribution 32,000 (net) 40,000 (gross) + 20% Relief 25% Relief Total 45% in pension via tax return 18,000 8,000 10,000 TOTAL FAMILY RELIEF = + Client IHT saving 12,800 Family member income tax saving BRT 65% 8,000 HRT 16,000 90% ART 18, % * Using relief at source (RAS) method 24 Technical Eye Special Edition

25 For a larger contribution, the client could take out Gift Inter-Vivos insurance, which will cover off the liability to IHT for what will be treated as a Potentially Exempt Transfer. This insurance will only need to cover 40% of the net value of the contribution (the potential IHT liability) assuming the member has already used their nil rate band for other estate planning. This should be a decreasing term cover for seven years, after which the PET completely falls out of the client s estate. Additional benefit for family member may include: Regaining part/all of their personal allowance; Reducing/eliminating any tax charge on the means tested child benefit. Reduce/mitigate tax charge (where pension contribution effectively widens tax bands) on encashment of an onshore bond or CGT charge on encashment of some collectives, for example unit trusts or OEICs. Other points to consider with your clients Check/Review Nomination of beneficiary/expression of wish forms regularly to ensure still relevant and up to date. The type of arrangements the client has with the provider trust based/contract based, discretionary or assigned to member. The implications associated with each type of arrangement. Copies of the scheme rules and trust deed. Discuss/Examine Member s health and life expectancy. Client s objectives Saving IHT, discretion over pension death benefits, one or many potential beneficiaries etc. The number of plans to be paid into a bypass trust, one or more, paid in separately or consolidated into one pension plan prior to death and then paid into bypass trust on death. Consider Making pension contributions for other family members what is tax status of recipient/family member, how much scope is there to make contributions, what other potential tax advantages are there for family member, i.e. regaining allowances, offsetting tax etc. Making the best use of any tax-free cash before age 75 (forms part of taxable fund on death at or after age 75) evaluate potential options. wesay Using pensions as part of a greater estate planning exercise may be more relevant since the pension freedoms, where there is now greater scope to invest these plans for the next generation while running down other non-pension assets. Technical Eye Special Edition 25

26 CanRetire Fixed Term Income Plan She can top up her income So how can you spot her? Meet Sue. She s a prime example of a typical income topper-upper. She s aged 55+ and probably has around 80,000 saved in her pension pot. Ideally, she d like to draw an income for a few years while leaving her options open for the future. What s her situation? She might have dependants to support, so she probably wants to carry on working to keep an income coming in. Her main focus is to keep up the day-to-day living standards for herself and her family. Sue understands her circumstances could change at any minute, so probably likes to stay fully informed on financial matters, as well as getting regular reassurance and advice from someone she can trust. What s a suitable retirement product? Well, since April 2015 she no longer has to buy an annuity so has the freedom to choose from what s available. She could try something like the CanRetire Fixed Term Income Plan. It provides a guaranteed monthly income to top up her wages for a fixed amount of time. After the fixed term ends, she will receive a guaranteed lump sum, the Guaranteed Maturity Value. While the term and income are set, her needs are still reviewed, allowing her to change to a different product if needed, and at the end of the term she can review her options. Other products she might find useful Either the CanRetire Flexible Drawdown Plan so she can take the money she needs when she needs it; 25% can be taken as a tax-free lump sum before making any withdrawals and leave the rest invested to enjoy any potential growth. Or she could also use the CanRetire Pension Investment Plan, which would give her a simple way to save as much or as little as she wants and access her savings when she needs to. I plan to continue working part-time and need my pension to top up my income Sue

27 ican Technical Services We understand how important high quality, accessible technical support for advisers is, both in maintaining and generating business. Canada Life s ican Technical Services Team understands that you, as advisers, have specific needs and that you need the right technical information delivered to you in the right way, at the right time. The team has more than 250 years of experience between them and delivers accessible technical services across tax, trusts, estate planning, pensions and investments, both onshore and offshore. Our dedicated technical website contains past issues of Technical Eye, Tech-cast presentations, articles and newsletters. These are all aimed at improving understanding to help you maintain existing client relationships and generate sales ideas to attract new customers. This is an important area of added value for advisers. Karen Stacey Marketing and Technical Support Manager Your Technical Services team Paul Thompson Paul has been employed in the financial services arena for over 40 years, specialising in taxation and trusts for the last 30 years. He is a Fellow of the Chartered Insurance Institute, sits on the ABI Product Tax Panel and is a long-standing member of the Research Study Group of the Insurance Institute of London. Neil Jones An investment specialist with over 20 years financial services experience with life and pensions providers, an investment company and as a professional adviser specialising in pensions, investments and estate planning. He is an affiliate of the Society of Trust and Estate Practitioners. Nigel Orange Nigel is a pensions specialist with over 25 years in the industry spent with major life and pensions providers as a broker consultant and a product and distribution specialist. Edward Morris Ed is a pensions specialist with 12 years industry experience working as a technical pensions manager and adviser. Ed has detailed pensions knowledge and experience in retirement planning, dealing with both individual and company pension arrangements. He is a Chartered Financial Planner. Patrick Kennedy With over 25 years experience, Patrick has worked in both professional adviser and provider marketplaces. Latterly he worked in a pensioneer trustee practice and as a technical officer for a Mutual Assurance Society focused on solving IHT case scenarios, particularly from a tax and trust perspective. He is a Chartered Financial Planner. Jeremy Pearson Jeremy is a taxation, trust & estate planning specialist with over 40 years industry experience spent with various financial services companies. He is an affiliate of the Society of Trust and Estate Practitioners and can assist professional advisers with all aspects of wealth management. Cathy Russell Cathy has worked in the financial services industry for over 20 years with experience in both professional adviser and provider marketplaces, specialising in taxation, trusts, estate planning and delivering training. She is a Fellow of the Personal Finance Society, a Chartered Financial Planner and a Trust and Estate Practitioner (TEP). Sam Newton Sam is a pension and investment specialist with over 14 years industry experience working for providers and asset managers, financial advisory firms and the regulator. He holds the Diploma in Financial Planning with the CII and is currently working towards APMI with the Pensions Management Institute. He has held various technical and policy roles within the industry. Your Canada Life contacts If you have questions or require support on specific cases or general principles surrounding tax, trusts, estate planning, onshore or offshore investment or pensions, please contact your account manager. Technical Eye Special Edition 27

28 NOW THEY CANRETIRE With our CanRetire range you can help more clients mix, match and blend to suit their retirement needs Many clients may think the chance to retire has passed them by. But retirement doesn t have to be a long, complicated and expensive process for you or them. Our CanRetire range offers pension plans, annuities and income options that are: Flexible, good value for money and simple to understand With smooth, drama-free, award-winning service And access to ican, our dedicated Technical Services Team for extra support So they can consolidate multiple pension pots, take their pension as an income, a lump sum or both. Meaning almost everyone gets could what they re looking for. For more about how you can help clients and to download our Advisers Guide to Who CanRetire? visit CanRetire.co.uk or contact our dedicated team at adviser.support@canadalife.co.uk or on Canada Life Limited, registered in England no Registered office: Canada Life Place, Potters Bar, Hertfordshire EN6 5BA. Member of the Association of British Insurers. Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority. Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland. ID R