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Access to pension freedoms in ill health could lead to inheritance tax trap


Following the unveiling of its ‘Income Select’ retirement income solution last month, Old Mutual Wealth has further enhanced the retirement income options for its pension customers with the introduction of three new options which facilitate the delivery of regular income in a tax efficient manner - also known as ‘drip-feed drawdown’.

This new development, available from Nov 16, means that Old Mutual Wealth’s Collective Retirement Account (CRA) now provides advisers and their customers with complete flexibility in how their untouched pension savings are accessed under the new pension freedom rules.

Specifically, the new option provides optimum tax efficiency of withdrawals by allowing customers to use the least amount of pension capital to deliver their monthly retirement income needs. Once an instruction is made for regular withdrawals, the process is automatically repeated, including any associated benefit crystallisation event calculations.

Advisers and clients will be able to control the tax they pay on regular monthly income withdrawals by drip-feeding their tax-free cash lump sum in order to provide the required income, build a drawdown fund for future use, or combine monthly tax free cash withdrawals alongside of taxable income to deliver their monthly income needs. This is instead of taking all their tax free cash in one go.

Using tax free cash in this way avoids the need for clients to withdraw larger tax-free cash sums which they have to re-invest outside of a pension tax wrapper to deliver regular income needs. These options also ensure that clients retain as much of their pension savings as possible for future retirement needs and also to increase the potential legacy value that can be passed on in the event of their death.

To accompany these new choices, Old Mutual Wealth has also upgraded the functionality of its Retirement Income Explorer Tool (RIET), which allows advisers to map out a client’s income plan, using the most tax-efficient method available across all investment assets a client holds either on or off platform.

Using a sophisticated stochastic modeller, the tool helps advisers bring to life a range of probable outcomes, based on realistic forecasts of variables such as life expectancy, investment returns and inflation. The interactive process results in clearly written reports, which can be branded with the adviser’s logo, that will help to demonstrate the value of advice by illustrating likely outcomes in retirement dependent upon the choices a client makes.

The tool will also help advisers to regularly review the initial planning with their clients. It will enable advisers to take account of changing circumstances in health, income needs and changing values of underlying wealth that clients may have.

Adrian Walker, retirement planning manager at Old Mutual Wealth, comments: “These new retirement income choices within the CRA allow advisers and clients total flexibility over how they create tax-efficient withdrawals from pension savings.

“Combined with the sophisticated RIET tool, the CRA now enables advisers and their clients to achieve almost any available combination of taxed and tax-free income that they choose as part of any client’s retirement income planning – whichever and whenever suits the client’s retirement income journey the best.

“Since the pension reforms were announced in March 2014, we have constantly been looking to enhance the service that we offer advisers and their clients. The CRA was built with flexibility in mind and has been delivering flexible income options for advisers and clients for many years, but I’m delighted that these latest enhancements will significantly increase the solutions we have available.”

For more information contact

Tim Skelton-SmithOld Mutual Wealth02380 916 99807824 145

Notes to Editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.7 billion in investments (as at 30 September 2019).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.

The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

Wealth Platforms includes Old Mutual Wealth UK platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

The Quilter plc businesses are being re-branded as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Charles Derby Group (becoming Quilter Financial Advisers)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Wealth Solutions in 2020)
  • Old Mutual International (becoming Quilter International in 2020)

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.