Executive/director looking to retire

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Anna is 58 and married with two children who have now left home. She had already taken the decision to retire before she came to see us, following a difficult period at work. What she primarily wanted from us was some advice on her various pensions.

She told us that she was in the process of encashing a personal pension she had saved into when she was a self-employed consultant in London. She realised at this point that it may be sensible to pause for breath and take some professional advice.


What we did for Anna:

  • We advised her not to proceed with the full encashment of the UK personal pension. She wasn’t aware that the IOM does not recognise the right to a tax free lump sum on UK personal pensions
  • We instead set up an Isle of Man self-invested personal pension (SIPP) which she could transfer her UK personal pension into and then she would be able to enjoy the benefit of a tax free lump sum from it
  • We also advised her to transfer her other occupational pension schemes into the Isle of Man pension. This has simplified things by putting everything in one place and allows her to draw an income from the SIPP which she was unable to do directly from her occupational schemes
  • We invested the money that was transferred from the other pensions into this SIPP sensibly, in a way that Anna was comfortable with, to create a strategy that would pay her a sustainable income in retirement for the long term
  • We advised her that as she had spent time working in the UK and IOM, she should get state pension forecasts from both the IOM and UK Governments because for people like her they are now paid separately by each Government.


A place in the sun

During the whole process we were very keen for Anna’s husband (John – age 60 and also soon to retire) to be present so he understood exactly what was going on. One of the things John was keen to know was whether we felt they could afford to:

  1. Buy “a place in the sun”
  2. Make gifts to their children

We put all of their financial details into the financial planning software we use. Based on the output from this our advice was that it would be tight - they could see this themselves using the simple and clear charts that the software produces. However, we were also able to show them that it was possible, if they released some equity by downsizing their existing property to supplement their retirement income.

On the back of this they have decided that their number one priority is to help their eldest child to extend his house now that their first grandchild has arrived and also their youngest child to get onto the property ladder.


What are Anna and John doing now?

At the time of writing they are in Spain looking at properties, weighing up whether to downsize and go for the place in the sun, or stay in the family home and go to different places on their holidays a couple of times a year. They realise that they can’t have their cake and eat it but now have a firm handle on the options available to them if they are to have the peace of mind that they will never run out of money.