Case Study - Personal Pension transfer & redirection of contributions

Our self-employed client aged late-forties wanted to retire at age 65 and was making considerable pension contributions of £500 per month gross into an old Personal Pension Plan with an insurance company. He is a higher rate taxpayer and finds the tax relief from the pension contributions to be a useful way of mitigating his overall Income Tax liability.

He wanted advice as to whether his original pension plan was still suitable. His main objective was financial security in retirement and he was concerned, as he had not received any review of his retirement planning since setting his pension up a number of years ago.

Having looked at his original contract in detail we discovered that actually the overall charges were fairly high and we explained his options which were to continue with his existing arrangements, redirect his future contributions into an alternative contract and leave the existing funds within his existing plan, or redirect future contributions to an alternative contract and transfer his existing fund to a new plan.

We recommended a new Personal Pension contract for his regular contributions and transferred the existing fund too. This resulted in a contract that had a much wider range of investment funds, lower ongoing charges, an Unsecured Pension (USP) option at retirement and also a deferred SIPP option, should he wish to ‘self-invest’ in the future (for example, by buying his business premises).

Even allowing for our fees, the projected fund value at his selected retirement age was higher than under his existing contract because of the lower ongoing charges. We also agreed to take ongoing renewal commission from his plan to cover the cost of an annual review meeting and valuation, to ensure that his pension plans are reviewed more regularly in future!



© 2011 Midland Financial Solutions Ltd



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