Restructuring of pension arrangements
We were approached via our website in respect of what was initially an Equity Release enquiry. Unfortunately this individual was presented with the real risk of losing the family home due to very challenging personal circumstances and required a truly independent and holistic review of their specific financial situation to understand what options, if any, they may have had to satisfactorily resolve the more than significant dilemma presented. Over the course of no fewer than half a dozen meetings, coupled with extensive enquiries of third party providers, the ultimate aim was to ironically avoid an Equity Release outcome to where possible safeguard the assets for passing down the generations. Fortunes changed dramatically with the tracing of previously unknown pension benefits, which once re-structured to take advantage of the ‘Pensions Freedoms’ legislation, enabled the full outstanding mortgage to be paid off with remaining reserves providing ongoing income which can be cascaded on to children, grandchildren, etc., in the future. Whilst the Equity Release route would have in part solved the problem, it was not the most appropriate solution therefore emphasising the broad knowledge and skillset available.
Use of tax relief and Marriage Allowance
Often couples come to us where one partner has limited earnings and even more limited retirement savings. Unbeknown to many, and even if you have no pensionable income at all, up to £2,800.00 can be contributed to a personal pension arrangement in any given United Kingdom (UK) tax year from birth and a maximum of £720.00 in the form of tax relief is added by Her Majesty’s Revenue and Customs (HMRC). This therefore results in a ‘gross’ amount of £3,600.00 on ‘day one’ with the opportunity for limited risk during the holding period thus safeguarding this 25% uplift. This process can be repeated up until the age of 75 noting funds can be accessed in full from reaching age 55. based on current legislation, potentially all tax-free through using available personal allowance in any given UK tax year. Furthermore, the opportunity to gain further tax-free amounts can be achieved by taking advantage of the Marriage Allowance which allows the transfer of up to 10% of the prevailing personal allowance between partners.