Do you not like the idea of buying an annuity at retirement? Don’t want to use your pension fund at retirement? And have other income and don’t want more income and higher rates of tax?

We have been using a wealth planning strategy for many years now which may be very interesting to some of your wealthier clients. And it’s really very simple.

We have found that some of our wealthier clients do not want use the money that they have accumulated within their pension funds as they already have sufficient income either from the sale of their business’s or property portfolio. And they don’t want more income and may more tax at Higher Rates. Many of these people are leaving their pension funds untouched until they really have to.

However, the pension fund can be used for wealth creation purposes. And here’s how it works.

  1. 1. Purchases an annuity with part or your entire pension fund to provide an income.
  2. 2. Use the annuity income to purchase a Whole of Life Assurance policy.
  3. 3. Whole of Life policy is written in Trust so the death benefits are outside of your estate.

So why does this work? And what are the client benefits?

Well, in most cases the policy holder could not pay premiums into the plan that would be in excess of the death benefit. In a recent case our client would need to live to age 110 to match the death benefit.

But let’s imagine the client did live to 110. What then? The advantage of this is that the death benefit is still outside of the estate, so will not be liable to IHT. The alternative of buying an annuity and accumulating the income that is not spent would most likely be liable to IHT, obviously subject to the nil rate band.

This is simple strategy which can be very effective.

Call me if you would like to discuss the strategy in more detail. This is a really effective way of really making annuity income work for you.