Senior Executive? Are you ready for the pension freedom changes?

As I’m sure you are aware in his 2014 Budget, Chancellor George Osborne announced a set of radical pension reforms. A number are already in play, however others are due to come into force in April 2015.

So what are the important changes from April 2015, and how might they affect you?

Freedom to draw down cash

From April 2015, if you are aged 55 or over and have a defined contribution pension, you can either take 25% of your pension tax-free in one lump sum or have 25% of any withdrawals made tax free.

For further information please read AXA’s Lowdown on Drawdown (

Flexible access to pensions from age 55

From April 2015 pension investors aged at least 55 will have flexibility on how they draw an income from their pension, over and above drawing down the tax-free lump sums. They can:

  1. Take the whole fund as cash in one go
  2. Take smaller lump sums, as and when they like
  3. Take a regular income via income drawdown – where they draw directly from the pension fund, which remains invested
  4. Take a regular income via an annuity – where they receive a guaranteed income for life but lose their pension capital

Please note any withdrawals over and above the tax-free amount will be taxed as income at your marginal rate.

55% pension ‘death tax’ to be abolished

Currently, it is only possible to pass a pension on as a tax-free lump sum if you die before age 75 and you have not taken any tax-free cash or income. Otherwise, any lump sum paid from the fund is subject to a 55% tax charge.

From April 2015 this tax charge will be abolished. The tax treatment of any pension you pass on will depend on your age when you die.

If you die before age 75, your beneficiaries can take the whole pension fund as a lump sum or draw an income from it tax free, when using income drawdown. Dependants can also choose to buy an annuity, in which case the income will be taxed.

If you die after age 75, your beneficiaries have three options:

  1. Take the whole fund as cash in one go: the pension fund will be subject to 45% tax (current proposal).
  2. Take a regular income through income drawdown or an annuity: the income will be subject to income tax at your beneficiary’s marginal rate.
  3. Take periodical lump sums through income drawdown: the lump sum payments will be treated as income, so subject to income tax at your beneficiary’s marginal rate

If you would like to discuss your options then please contact us NOW on 0191 281 9862 or e-mail to arrange a FREE initial appointment

Additionally please have a look at our core services document or visit our website for further information

November’s most read articles

Hello from Reeves Independent

We hope you are well & looking forward to the festive period

Firstly please do join our Christmas hamper competition! Simply tweet @reevesifa your favourite Christmas present ever using the hashtag #favouritechrimbopresent to enter!

Secondly we know this is slightly earlier than normal but we understand that no one wants to be bombarded with pension & financial articles near Christmas time so we thought we would get this out now!

Below are the most read links from November;

  1. Simon Read: There may be trouble ahead for cohabiting couples  who don’t make a will
  2. Why women should insist on pension savings in divorce
  3. A case for income protection ….
  4. Are you ready to embrace income drawdown after pension freedom in April?
  5. Why cashing in your final-salary pension could be a good idea?
  6. Can you make your pension pot work harder for you? How drawdown works & why savers like it
  7. ISAs v Pensions – where you are in life could influence how your save
  8. Annuities vs Drawdown – which is right for you?
  9. Self-employed? Use your pensions to reduce your tax bill!
  10. “I had to sell my home when I become ill”
  11. For anyone considering Drawdown – Lowdown on Drawdown!
  12. Critical Illness Insurance – what is it & is it worth having?

We hope that you find some of the above useful. If there are any areas that you would like more articles on please let us know as we welcome any feedback

If you would like to discuss any of the above articles & how they may affect you then please contact us NOW on 0191 281 9862 or e-mail to arrange a FREE initial appointment

Additionally please have a look at our core services document or visit our website for further information

September’s most read articles!

Hello from Reeves Independent

We hope you are well

There has been a number of events & announcements throughout September that will have an effect on people’s investments & retirement plan.

Throughout the month we have posted a large number of articles in our Linked In Group, on Facebook & on Twitter

Below are the most read links from September;

Who benefits from abolition of 55% tax on pensions?

This may apply to some of my contacts! NHS staff could retire early to avoid pensions tax hit!

Is it possible to carry forward unused allowances?

DIY pensions: the six alternatives to an annuity

Auto Enrolment – why you should seek advice!

Avoidance or evasion: Legal and illegal ways to minimise tax Having a second child? Five financial considerations

Seven ways in which the Scotland No vote will affect the UK economy and markets

We hope that you find some of the above useful. If there are any areas that you would like more articles on please let us know as we welcome any feedback

If you would like to discuss any of the above articles & how they may affect you then please contact us NOW on 0191 281 9862 or e-mail to arrange a FREE initial appointment

Additionally please have a look at our core services document or visit our website for further information

August’s most read articles!

I hope everyone has had a good holiday period

We apologise for the lack of articles on our social media mediums over the holiday period. Hopefully we will be back to normal for the rest of the year

As you know we like to regularly provide our clients & prospective clients with information on the most important financial planning areas. We frequently post articles within our Linked In Group, on Facebook & on Twitter

Below are the most read links from August;

Inheritance tax checklist

Women hitting state pension age before April 2016 can boost their pension pot by 20% if they defer

PENSION REFORMS Free to choose

Pension loopholes: five ways to get money for nothing

Five financial perils of self-employment

Nine in 10 Britons risk financial future by not having a lasting power of attorney

Tax loophole: boost your pension by 88pc a year
How to get the best life insurance policy

‘We have taken out insurance cover to safeguard our legacy’: Six ways to spare your heirs from paying inheritance tax

Pensions clinic: your questions answered

We hope that you find some of the above useful. If there are any areas that you would like more articles on please let us know as we welcome any feedback

If you would like to discuss any of the above articles & how they may affect you then please contact us NOW on 0191 281 9862 or e-mail to arrange a FREE initial appointment

Additionally please have a look at our core services document or visit our website for further information

Case Study – Retirement Options – Please seek advice before informing your Employer!

Last week I saw a client who unfortunately suffered a serious sudden illness last year. The outcome at the time was unclear as they were unsure if they would make a full recovery or whether they would be capable enough to go back to work.

They had come to me for advice on their financial position & look at the options available 12 months ago. Throughout this period I have been in regular contact with them as they didn’t want to make a decision due to the uncertainty of their future.

Client H was 57 & the member of a good Final Salary Scheme

What were their options?

  • Carry on working
  • Stop work & defer taking their pensions
  • Stop work & take early retirement
  • Stop work & take early retirement due to ill health
  • Take the Transfer Value & use one of the personal retirement options on the open market

Firstly the client entered talks with their organisation to seek options whilst we did investigations on the open market options

What open market options did we investigate?

  • Annuities
  • Enhanced Life Annuities
  • Switching the fund to a Personal Pension to maximise death benefits
  • Switch the fund to Drawdown – this would give her a 25% tax free lump & potentially a higher income than the current scheme would give. Additionally in the event of death it would leave money for her husband & family, which was seen as their main priority due to their current health condition

So what happened next?

Unfortunately this is where the problem started. The client as stated above had asked their employee for the facts about their pension plan. Their employer however has taken this request as the instruction that my client wanted to retire & has forced her down a route without explaining the other options she has available.

Therefore the client can’t now look at the open market options that we investigated, which in turn means they maybe missing out on a significantly better option that would meet their desired priorities in a more appropriate manner.

This case study scenario is about someone with ill health but this is the case for anyone wanting to look at their retirement options!

The moral of this case study is that you must tread carefully when looking at your retirement options! Please do seek advice before contacting your employer!

If you would are you thinking of retiring then contact us NOW on 0191 281 9862 or e-mail to arrange an FREE initial appointment


Case Study! The Budget – How has it changed people’s retirement plans?

This week I spoke with a client about the implications of the recent budget announcement on their retirement planning. It highlighted to me the importance of reviewing how you use your full assets in retirement. Below is a brief explanation of my client’s current position

Client B is 57, has no mortgage & has approximately the following:
•       100k Transfer Value from her Final Salary Scheme
•       50k of savings
•       100k in a Personal Pension

She wanted 15k a year NET income to maintain her lifestyle

How could she achieve her desired income?

1.      Take her Final Salary Scheme now, which would give her a 25% tax free lump sum of 25k.
2.      This would leave her 75k to spend as she liked. This she can take at 7.5k for the next 10 years leaving her with 7.5k to find each year for the next 10 years.
3.      She could use her tax free lump sum of 25k for 10 years at 2.5k per year topping this 7.5k up to 10k.
4.      She could then use her 50k savings over the 10 year period to give her the remaining 5k to provide the 15k a year she desired.
5.      At 67 she would then start to receive her state pension of 7.5k
6.      She would then take the 25% tax free lump sum from her personal pension & put the remaining in drawdown, which would give her the remaining 7.5k for just over 13 years. This would take her to 80 years of age

Points to note

1.      If she was to run out of money she could use equity release on her home to cover the shortfall.
2.      She is also expecting inheritances ranging from 50-100k.
3.      The above plan does ignore inflation, which potentially would be counteracted by investment return pre & post drawdown.
4.      It was beneficial for the above client to access her Final Salary Scheme early as the death benefits were poor. This will vary from scheme to scheme of course.
5.      This client preserved her Personal Pension
6.      The above plan assumes you need more money as an earlier pensioner than an older one & that you are happy to use value from your home.

My client has now decided to retire immediately with her desired income, which she certainly could not have been able to do pre budget!

This case highlights the concept of ‘sweating your assets’ to allow you to potentially retire earlier than you had previously thought

Everyone, as a result of the budget, should reconsider their retirement plans & look at all the options available to them!

If you would like to discuss how the Budget has affected you retirement plans then contact us NOW on 0191 281 9862 or e-mail to arrange an initial appointment

Budget 2014! Amazing change to pensions that will change your retirement planning!

We don’t normally like to put out a post budget report but after yesterday’s announcements we felt unusually that this impacts significantly on a large number of our clients. The bottom line is that some of the restrictive rules on how you take your pension benefits are about to be relaxed. This is a game changer for clients with pension’s funds that are not being taken.

Yesterday’s budget announced plans that effectively opens up access to pension schemes by removing the need to buy an annuity. This is news that I know many clients will be absolutely delighted about.

It will be an extremely popular decision to the voter, will release millions of pounds into the economy that was otherwise tied up and will also bring in extra tax for the government.

The concern must be that this will open the doors to funds that are supposed to be for the long term security of clients and I would envisage the regulator will be looking very closely at this area of advice.

We see this news as being the most significant in the pension industry in the 23 years that Nigel Reeves has been in it.

Many client scenarios will be affected – we have listed a number of them below

  • People about to retire
  • People with Drawdown
  • People with ISA’s
  • People with funds under 30k
  • People wanting to retire at 55 years of age
  • People that have not used pensions due to lack of access

Are you one of the above?

However like most of these things the devil will be in the detail and one would not be surprised if this is amended greatly during the next few months of consultation period. Anyone seeking to buy annuities may be advised to wait till this is clearer over the next few months.

Rest assured we will make sure we consider all the facts and be up-to-date with regards the opportunities and risks that this news may bring. We will continue to provide bespoke solutions to each individual.

Below are a couple of documents the treasury have released that we thought may be of interest to you

Budget 2014: The New ISA

Budget 2014: Greater choice in pension explained

If you would like to discuss how the Budget could affect please you contact us NOW on 0191 281 9862 or e-mail to arrange an appointment  

What do people, approaching retirement, value the most?

The following is a report by AXA Life Invest – It highlights a number of important points that I thought were relevant**

For the second year in a row now, AXA Life Invest has produced a ‘Cost of Living in Retirement’ report, to better understand pensioners’ needs.

The 2013 report examined the effect of current economic conditions on retirees’ standard of living and what the next generation of retirees can learn from the experiences of today’s pensioners.  This year, AXA Life Invest has built on this research, extending it beyond today’s pensioners to people in their 50s and 60s who are approaching retirement. The resounding response is that people value certainty: they want a stable, guaranteed income that they will not outlive.


People value certainty: they want a stable, guaranteed income that they will not outlive. But people approaching retirement tend to bury their heads in the sand when it comes to their retirement savings, when in fact, they need to be given the tools to take control of their finances and place themselves firmly in the driver’s seat.*

This year the report shows that certainty is king for those approaching retirement.

  • 73% of those approaching retirement said that what they would value most in a pension is a secure income in retirement
  • 61% of those approaching retirement would find it beneficial to know up to 10 years  n advance of their retirement the minimum amount of pension income they would receive
  • 39% would invest more into their pension if they knew what their retirement income would be

Although the survey focused on UK pensioners who are not reliant on state benefits, the Cost of Living in Retirement report has revealed that people neglected to take professional

Not only do people start late when it comes to preparing for retirement and neglect to take vital financial advice, but many people approaching retirement do not know how their pension is doing:financial advice before retiring. In fact 67% of today’s pensioners surveyed never received advice from a financial adviser and, worryingly, just fewer than 40% of pensioners did not start saving for retirement until they were over 40.

  • Over 7 in 10 do not know how their pension fund is invested; while around the same proportion does not know how their pension pot is performing for them.
  • 40% of 50-65 year olds in employer sponsored DC schemes have never reviewed the investment performance of their pensions.

Delving further into risk, the report showed that those approaching retirement accept the principles of lifestyle investing but don’t know what this means in reality:

  • 69% of those approaching retirement describe themselves as ‘risk averse’.
  • Almost two-thirds (62%) agree that taking on less risk means moving their pension into safer assets such as government bonds
  • But 90% of people in a DC scheme don’t realize the majority of their pension pot is invested in gilts, which are currently delivering very low returns.

Given the above, it will come as no surprise perhaps to hear that a fifth of pensioners were caught out by lower than expected annuity rates. The report showed indeed that for 20% of pensioners, their annuity rate – and therefore their retirement income – was less than they had expected. For a further 10% of pensioners, the rates were a lot less than they expected. Puzzlingly, 27% do not have an opinion about their annuity rate, vividly demonstrating the public’s lack of engagement in this important element of retirement income.

Overall, there is a worrying lack of knowledge and preparedness for retirement by many

Yet, no one should be in the position of being surprised to discover just how little their life savings have actually yielded in terms of retirement income. But this shock to the system is avoidable. It pays – both economically and psychologically – to prepare for retirement in advance and to consider all options.people in the country. Britons are oblivious to how early they need to start saving and how their fund should be performing.

In a world where risk is borne almost entirely by the individual, people are searching for a new defined benefit solution. But the 21st century version of the defined benefit pension already exists in the UK – in the form of the unit-linked guarantee. The unit-linked guarantee is the only retirement solution out there that can tell people exactly how much money they will get each year of their retirement.

Are any of the above points relevant to you? If you think we could help contact Reeves Independent on 0191 281 9862 or email for a FREE introductory chat! 

*AXA Life Invest’s 2013 Cost of Living in Retirement report

** The report has not been edited in anyway

Retirement Options – Fact Sheet

Retirement Options – Fact Sheet

Our service
This service is designed to help you make the right decisions when you retire and can have a significant impact on your income. This includes how you retire and the timing of your retirement – whether it’s early, at the

We work primarily with clients who have accumulated multiple assets (pensions, property and investments) to look at all the options available for maximising your income.

What we offer

With our retirement options service we can help you by:

  • Analysing your needs
  • Researching ALL the options available to you
  • Providing a detailed report of the options available
  • Meeting to discuss your options
  • Implementing the agreed decisions
  • Liaising with policy providers
  • Suitability reports
  • ALL supported by a full administrative service.

How we work

  • Step 1: Introductory chat to discuss your situation, needs and goals.We follow a clear path with all of clients to ensure that we only ever provide advice that you need and that our services and fees are transparent.
  • Step 2: Approach existing providers with your permission
  • Step 3: Analyse existing assets and explore all retirement options
  • Step 4: Discuss your needs; our recommendations; the next step and fees*.

*You have the option not to proceed at any point until here.

The benefits

You don’t want to let your pensions or investments dictate when or how you retire. Reviewing your retirement options will put you in control so that you:

  •  Maximise your income in retirement
  • You are able to retire at the time YOU want
  • The options you choose are matched to the lifestyle and retirement you want.

What next?

If you think we could help contact Reeves Independent on 0191 281 9862 or email for a FREE introductory chat! 


Retirement: bad for your health?

Recent research has suggested retirement may not be good for our health. Having a financial and lifestyle plan in place as soon as possible can help to ensure this doesn’t happen. This month’s guest blogger, leading HR consultant Mara Thorne, looks at the issue and offers some tips on preparing for retirement.

According to research conducted by the Institute of Economic Affairs and the Age Endeavour Fellowship, retirement may not herald the halcyon days of leisure and relaxation on which so many working people are pinning their hopes. After an initial improvement in well-being due to a reduction in stress levels, retirement actually increases the risk of clinical depression, diagnosed physical illness and the need for medication.

The solution, according to the authors of the study as well as the International Longevity Centre UK, is to facilitate a better “work-life balance” and enable older people to remain in work for longer. Not only would this help older workers both economically and socially, but it would also boost the economy as a whole. PWC, the large accounting firm, has estimated that raising the state pension age to 70 rather than 68 by 2046 would add around 0.6 per cent to the nation’s GDP.

You may be surprised to learn that, according to official statistics, 980,000 people aged 65 and over are still in paid employment. So as we are all living longer, does the prospect of working until we are 70 appeal to us, or are we reluctant to relinquish our dreams of lazy days pottering in our gardens or improving our golf swings? Why would we choose to continue working into our late 60s or even 70s?

My guess is that the most common reasons are financial constraints and fear of boredom and isolation.

“I can’t afford to retire”

Some people continue to work beyond 65 simply because they need the money. Inadequate pension provision is likely to become an ever bigger problem with the demise of the generous final salary pension schemes that fuelled the comfortable retirements of previous generations. Many people aren’t investing enough in their pensions to provide a decent income in retirement. The trend for starting a family later in life also means that the financial commitments associated with educating children may continue well into a person’s 60s. Now that the default retirement age has been abolished, if your pension income is going to be inadequate, you may have no choice but to keep working for a few more years.

“I still enjoy my job”

Other people simply enjoy their work, either for its intrinsic interest and satisfaction, or because of the social aspects of attending the workplace. After a working life of 40 plus years, with its familiar routines and camaraderie, you may feel anxious at the prospect of suddenly having nowhere to go every day, no structure to your daily life. We look forward to our holidays while we are working, but not needing to get up at a certain time and go to work – so pleasant in small doses – can be quite disorientating after a few months. And boredom and social isolation can be positively damaging to health, potentially leading to the increased risk of depression which the researchers found. People need to do something, to get out of the house and engage with other people, in order to be happy and healthy.

One of my clients was telling me recently that after deciding to “retire” in his late 40s because he was financially secure, he got so bored with playing golf that he started another company. I am sure there are many entrepreneurial people out there who would find the traditional idea of retirement equally tedious.

The right approach to retirement

The key to a successful and happy retirement, I believe, is to plan for it, both financially by ensuring that you save in a workplace pension or in some other sensible investment, and in terms of hobbies and activities. All too often retirement is a sudden life change, like jumping off a cliff. One day you are working full-time, the next day you have nothing to do. One day you have a full-time salary coming in, the next day you are reliant on a vastly reduced income. The change is too abrupt.

In an ideal world, with your employer’s agreement, a gradual reduction in your working hours would be a much better way to ease your transition into retirement, allowing you to adjust gradually to a reduction in income, and to find other activities to occupy your increasing amount of free time. It would be good for your employer, too, because you could gradually hand over to a younger person, passing on your wealth of experience, which would help with succession planning.

Baroness Greengross of the ILC criticises employers for failing to do more to support older workers. She cites some good examples of large employers such as Sainsbury’s and BMW which have schemes in place to facilitate a “phased” approach to retirement, while others make the right noises but don’t deliver in practice.

We live in an ageing society and the problems associated with poverty and ill-health in retirement are not going to go away. It’s something we all need to think about and plan for, both as employers and as individuals.