Income Drawdown
Income drawdown is a complex area of advice and requires sophisticated investment strategies to minimise risk, to say nothing of the onerous monitoring requirements. As specialists we can help you deliver this to your clients throughout their retirement and including appropriate ‘exit strategies’ before or after 75.
Unlike pension transfers annuity deferral is a continuing event. The option to secure part or all of the retirement income on a guaranteed basis requires to be kept under review. This involves monitoring market annuity rates and capital values in unison, since even with no upturn in annuity rates opportunities can be missed if one fund in the client's pension portfolio has enjoyed sufficient capital growth to make a partial buyout attractive.
Due to the effects of mortality drag achieving relative value for money against an annuity involves selecting investments which, averaged over the whole term, will outstrip medium term gilts. This necessitates using investment media which offer a "risk premium". But such investments usually fluctuate in value and are particularly unpredictable in the short term. Withdrawals in the early years will often accelerate the problem as the time scale for recovery shortens to age 75, posing the classic risk/reward dilemma.
To provide a viable alternative for advisers we offer a comprehensive "cradle to grave" service with all investment commissions retained by the introducing firm. Using our ‘low cost’ SIPP with access to institutional funds at well below the AMC for normal retail funds the total charges will typically amount to just 1.75% p.a. Intelligent Pensions will provide portfolio management and takes all responsibility for the ongoing advice. Your firm is appointed as the Investment Agent for the SIPP, under a tripartite agreement, for which you receive 0.5% p.a.
As Investment Agent all client investment instructions are processed by you including buys, sells, and switches, using on line dealing arrangements which we will arrange on your behalf. As Investment Agent your firm’s obligation is that of ‘best execution’ i.e. checking that deals are completed on a timely and accurate basis, and to ensure any errors are rectified. Your role is governed by the permitted activity of ‘arranging (bringing about) deals in investments’ (see glossary definition )as opposed to ‘advising on investments’ which is the role that we undertake. You will already have this permission as part of your normal financial advisor activities.
Our objective is to provide a highly professional service to which advisers introduce their clients without compromising the existing client/adviser relationship. Administration and trustee services are provided by James Hay Pension Trustees Ltd. with investment strategies, reporting and monitoring handled by Intelligent Pensions.