SARAH


Flexi Access Drawdown

Sarah wanted to improve her existing home and to reduce her existing working hours without affecting her current standard of living.

To that end, Wealth of Advice helped Sarah set up a flexi access drawdown pension.

The Challenges

Sarah did not want to increase her personal debt by taking out a loan or other such credit to finance her home improvements.

She also wanted to keep her income roughly the same, after she had reduced her working hours in order that she was not be left with a shortfall in her income.

What We Did

We held a preliminary meeting where we discussed Sarah’s needs in full and completed a fact find.

Sarah is an active member of her employer’s Final Salary Pension Scheme and she will continue to accrue future benefits in this scheme. She confirmed that the projected benefits this scheme will provide, along with her state pension income, will be sufficient for her to live a good standard of living in retirement.

We therefore suggested that the Final Salary benefits remain intact and not accessed earlier than the normal retirement date which would incur severe penalties.

Sarah explained that she had accumulated funds in a Personal Pension with a company called Phoenix Life. This was a pension that existed as a result of her previous employer transferring funds into her fund many years ago. It had never been reviewed since it was set up and she had no idea how it was currently invested. She rang Phoenix Life to request advice on what she could do with this pension and was told they could not give her advice.

We obtained information from the pension provider and outlined her option in a second meeting where we highlighted the possibility of extracting funds from this pension.

We discussed all of the options available and quickly discounted her purchasing an annuity with her funds, as she simply does not want an ongoing fixed income and also wants as much of her remaining pension funds to pass to her children on her death.

We therefore concluded that she needed a more flexible option and recommended Flexi Access Drawdown to her.

Sarah understood easily how our proposals would affect her and quickly asked to proceed with this recommendation.

The Results

After researching Flexi Access Drawdown providers across the entire market we set up such a contract for Sarah.

She was then able to withdraw 25% of the transfer value as a tax free cash lump sum and this had been earmarked to be spent on the renovations to her home, it also gave her the opportunity to pay off all of her credit cards and clear her overdraft.

We also set up a regular monthly withdrawal from her Flexi Access Drawdown Pension giving her to receive £300 net income per month to top up her existing income.

As the remaining pension funds are invested, it is hoped that these funds grow between now and when she actually ceases work in order to compensate for the loss of earned income.

If Sarah dies before age 75, the entire value of her remaining Flexi Access pension fund will be paid completely free of taxes to her children in equal shares.

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