What We Do   >>  Case Studies 

  • The Financial Conduct Authority does not regulate estate planning.
  • Tax treatment varies according to individual circumstances and is subject to change.
  • The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.

Standing Pensions on their Head 

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It's the money that goes into a pension plan in the earliest years, with the longest time to grow that really makes the difference. Meet my youngest pension clients age four and five.

Thanks to their grandmother, who is paying pension contributions on their behalf,  these boys will have a real head start.   Whilst they won't be able to access any of the benefits until age 55,  if contributions are maintained at the current level by their pension funds should be £2,070,000. 

They won't have the worry of having to make huge pension contributions in their middle years "to catch up" and there's some great tax advantages to this arrangement too, which benefit the whole family.   Let  me explain.

Their grandmother, unfortunately widowed, was left financially secure as a beneficiary of a large number of  life assurance policies and a portfolio of residential let properties generating a secure and increasing income.

As part of the strategy to reduce her estate and ultimately  the burden of inheritance tax for the next generation,  our grandmother is  adopting  several financial planning  strategies.   One of which is making regular payments as part of her normal expenditure, utilising the fact that third parties can make pension contributions for someone and benefitting from the H.M.R.C. rule that states :   " any regular gifts you make out of your after-tax income, not including your capital, are exempt from Inheritance Tax.  These gifts will only qualify if you have enough income left after making them to maintain your normal lifestyle and include monthly or other regular payments to someone. "   

Now another H.M.R.C. rule allows tax relief on pension contributions at 20% for non earners for gross contributions up to £3,600 per annum.   In practical terms,  our grandmother can make pension contributions of up to £2,880 for each grandchild, each year.   A reduction in her estate of  £5,760 each year , without reducing her lifestyle .  If this continued for at least twenty years, assuming the property portfolio continued to generate rate this would amount to £115,200 leaving her estate and a potential saving of £46,080 in inheritance tax.   Our two grandchildren as recipients of the contributions will be entitled to the tax relief at  the basic rate of 20% and will  therefore receive £3,600 into their pensions each year.  

Having agreed the framework for the pension contributions part of my work, as a  financial planner  has been completed.  The next stage, that of implementation involved, setting timescales,  an assessment of the attitude towards investment risk and capacity for loss.  Capacity for loss was an easy one, our grandmother wanted to reduce her estate and therefore could afford to lose the money. However, someone had worked hard for that money and it would be wrong to be complacent, indeed our grandmother has a very cautious attitude and if it made sense she would keep all her money in cash deposits.   The boys will be benefiting  from the gift of pension contributions, therefore it is their attitude towards risk that we must consider.  As they are minors we adopted the risk attitude of their father and given his experience of investments and the timescales involved  he  felt comfortable with taking an adventurous approach.   

With this aspect agreed,  it was time to research which included the formulation of an asset allocation, selecting appropriate investments , comparing the annual management charges between different products and platforms before making the final recommendation.    The investments also included some ethical investments that although equity based and didn't fit with our grandmother's cautious nature, they did fit in with her ethical outlook so that was an added bonus for her.

The last thing to do was to arrange the frequency of review appointments. 

Lucky boys.

  • The Financial Conduct Authority does not regulate estate planning.
  • Tax treatment varies according to individual circumstances and is subject to change.

Case Studies

I'm lucky,  as a financial planner I get to meet some brilliant people who trust me to advise and guide them with some really important life decisions.   In this section of the website these are real life examples of  "What We Do".

Quit smoking and save. 

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Case Study Two 

Standing Pensions on their Head

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Case Study Three 
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Case Study Four 
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Case Study Five