Financial Services

A valued client of ours runs a profitable business and his objective was to maximise his and his wife's drawings tax-efficiently. Additionally he wished to understand and better control his pension plans, and to maximise the tax-free cash available.

At the outset, the client had seven pension plans with four different companies, some dating back to the early 80s, and with no particular objective or investment control. The total value was approximately £160,000.

His 50th birthday approached and it would have been possible to draw benefits immediately, however, we did full comparisons to ensure any transfer penalties would not disadvantage the client. As virtually all of the old plans had substantially higher charges than a modern plan, we recommended consolidating the plans two plans into one as follows:

Executive Plan	£53,000	Tax-Free Cash	£45,000
Personal Plan	£107,000	Tax-Free Cash	£26,750
Total (as before)	£160,000	Tax-Free Cash	£71,750

All Tax-Free Cash is available without penalty at any time after April 2006

This maximises the tax-free cash using the best possible combination of the old rules available before the major change due in April 2006.

We also put in place a smaller pension plan for the client's wife, all contributions being tax deductible, and the whole fund will be available as Tax-Free Cash after April 2006, value approximately £10,000.