The Quick View option provides an initial overview of the new pension options available since April 2015, once a client has reached age 55.
Eight simple questions are asked about the client, their current earnings, existing pension fund, intended retirement age and required income to provide a projected fund value at retirement age.
This value is used to show how much income the client could receive should they take either an annuity or drawdown (assuming they take the full 25% tax-free cash lump sum upfront), or a lump sum of the full amount.
The projections are shown at ‘today’s prices’ – they have been discounted by inflation to show the value as if they were being spent today. They also include the new flat rate State Pension to be introduced in 2016 if the client will have reached state pension age on their selected retirement age.
The adviser can choose to show a range of possible outcomes based on good or poor market conditions (based on the stochastic model explained in the answer to question 8), which can be changed easily using a slider.
If the pension fund is insufficient to provide the required level of annual income, or cannot sustain that income for the full number of years from retirement until the ‘age you might live to’ figure, a warning will appear. It is possible to go back and edit the required income or other inputs entered previously.
All the data entered in Quick View can be carried over into the Full View option, where additional questions will need to be answered.
Quick View looks great when using an iPad with your client.
The Full View option is an advanced planning tool that builds on the calculation approach of the Quick View option. It has three key additional areas of functionality:
- Advanced tax planning to target a net income or expense requirement throughout retirement
- Additional data entry options
- Additional at and in retirement options.
Where the Quick View option shows the gross income or fund at the target retirement date, Full View shows how the available assets and incomes can meet a net-of-tax income or goal throughout the client’s whole of later life.
The client’s expenses in retirement for utilities and other living costs can be entered optionally and used as the post-retirement target income. One-off objectives or goals can be entered to provide additional income over a period of time, for a special purchase or holiday, for example.
A specific plan for the client’s options around taking income from pensions and other investments can also be configured, such as whether or not to take a tax-free cash lump sum at outset, or to use a blend of annuity and drawdown, for example. ‘What if’ scenarios can be entered to show how changing any element of the retirement plan could improve the client’s future lifestyle.
55 is the minimum retirement age on both the Quick View and Full View options.