Our clients lead busy lives and we appreciate that they sometimes find it hard to take time out to attend to retirement planning. But, as the experience of one client shows, a quick telephone chat with a Reeves advisor can pay dividends.
Peter Jackson has been a Reeves’ clients for three years. Aged 62 and married, he is a former journalist, still a professional writer and has just had his first book published.
"She works part time earning £20,800 a year, with a small contribution to a company pension scheme. I’m employed through my own limited company through which I pay myself a monthly salary which is just below the income tax and national insurance thresholds. Because of Covid and the fact my book has only just been published, the limited company is likely to just break even this year, so there will be no spare cash for pension contributions.
"We do have some cash savings in the bank, but we use those to supplement our monthly income in the years running up to drawing on our pension funds, which we plan to do in a year or two.
However, I did mention to Jack that we also have a stocks and shares ISA with a value of about £25,000. Jack pointed out that this would be better employed by being paid into our pension funds to take advantage of the tax relief.
“So, what I had anticipated would be a humdrum, box-ticking conversation suddenly became something much more significant. As a result of Reeves’ advice, we are cashing in that ISA. We will use it to pay the maximum amount into my pension of £6,864, which will be grossed up with the personal tax relief to £8,589 and Anne will pay in £13,968, which will be grossed up to £17,460. This gives us a total tax relief of £5,208, a bonus from the taxman which goes into our pension pots to grow tax free. It would have taken years to achieve that in growth, even in a well performing ISA.
Please note that the advice provided to the client in this article was for a specific client circumstance and may not be suitable for your circumstances and objectives. Income from a pension is taxable at your marginal rate whereas income from an ISA is not taxable. This article is for information only and should not be seen as advice or a recommendation to act. Please speak to Reeves before taking any action.