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£20,000 Extra Tax Free Cash - Case Study

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Background

A new client, Tony, contacted us as he was approaching his 65th birthday and he wanted to discuss his retirement options.

His existing pension provider had recently contacted him and confirmed that his pension (a deferred annuity)  would be either £17,000 a year, or else a lower amount of £15,000 a year plus a tax-free lump sum of £91,000.

These figures are on the basis of a 50% widow's pension for his wife’s lifetime should he die before her, and the benefits increasing each year to counter inflation.

The Planning Recommendation

We discussed the different retirement income options available to Tony and as he and his wife were relatively cautious we agreed that an annuity was the most appropriate.

As Tony and his wife had some minor health issues we found that we could obtain them a better annuity rate than had been offered by their existing annuity provider.

By taking advantage of the higher enhanced annuity rate it was possible to rearrange things so that Tony could keep the same income on the same terms, but with an increase to his tax free cash lump sum of just over £20,000, to £111,500. 

Conclusion

Ultimately the clients decided that they didn't need as a high an annuity income; consequently we included a 100% widow's pension to protect this wife, and the clients took an even higher tax free cash lump albeit with a lower annuity amount.

Overall, the client ended up with an annuity tailored to their own particular circumstances and gained over £20,000 in additional tax free cash due to taking advantage of an enhanced annuity rate.

Note, this case study was based on Rowley Turton's understanding of the rules at the time, and is an example of our work only. This case study is not individual advice, and you should obtain individual professional advice based on your own personal circumstances, and the current rules, before undertaking any action. Rowley Turton accept no liability for anyone taking any action as a result of this case study or any other information on our website.

Is it time to review your retirement planning?

Register online, phone us on 0116 282 2177 or e-mail enquiries@rowleyturton.com today to arrange an initial meeting to discover how leading Leicester IFA Rowley Turton could help you and your family.

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