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Future Planning Wealth Management has expert knowledge and systems in place to work with clients in helping to exit their business. This lady was referred to us by a client that we currently work with.  

Client scenario: 

• Our client aged 58
• Single with no dependents 
• Owned a successful catering business 

Having worked in her business for 30 years, she had built up these assets: 

• Pension held as a SIPP worth £320,000 
• Frozen final salary pension scheme set to pay £2,000 a year from age 65
• Home valued at £600,000 
• Mortgage of £40,000 owing
• Personal savings of £150,000 combination of savings accounts, NISAs and Premium Bonds 
• Company balance of £250,000 

Client concerns: 

• Pension fund going up and down quite a lot causing uneasiness 
• Cash balance in business sitting there, as not wanting to pay lots of tax to draw this
• Is there enough money to enjoy retirement at 65 and be able to finish working completely 

Some of the work involved: 

Meetings were held to accurately obtain both personal and company figures in full, and to clearly understand goals. Once this process had completed we ran the number crunching exercises, together with understanding the existing pension schemes in a high level of detail, completion of a Risk Questionnaire and an in-depth discussion regarding "capacity and tolerance for loss".  Different models were created to show alternative approaches and the recommended route.  

It was important to write to the existing SIPP pension provider to understand what the money was invested in.  It was important to have a high level of knowledge of both company and personal figures, which by liaising with the Company Accountant sped up this part considerably to then begin to formulate exit strategies.  

Solutions: 

We presented a clear picture of both what the current position looked like and future position will look like, including answering "is there enough money to live the lifestyle desired at retirement".  There was not unfortunately however with some recommended alterations to the current scenario, she would have more than enough money available.  These changes included: 

• Arranging for both tax efficient withdrawals from the company to be made each year and also for pension funding to be done so that by retirement all company money would be held outside of the company. By doing this tax efficiently, the reduction in taxes meant that there were considerable tax savings made initially.  This also will, together by making another change, reduce the ongoing Income Tax payable.  
• Amending the existing SIPP pension to lower ongoing costs and increase transparency and value.  This saved £2,400 a year alone and reduced the risk and volatility of the pension, meaning less sleepless nights especially as getting closer to retirement.  
• Repayment of mortgage from personal cash assets, as paying more in interest on here than receiving on savings.  
• Writing a Will to reflect current wishes as this had been put off due to never finding the time 

As a result, we showed the client how these changes meant that there would be: 

• Reduced risk with existing pension 
• Lower costs with existing pension 
• Reduced tax to pay on income
• Lower outgoings with mortgage repaid 
• The ability to retire at 63 and not 65, to allow more time to enjoy desired lifestyle without the fear of running out of money 
• Not leaving too much money behind for others to spend out of uncertainty of knowing whether there was enough 
• The knowledge that the client would be financially independent from relying on any proceeds from the business sale, and anything this generated would be a "bonus" 

We recommended the client check a couple of the income figure variations with the Company Accountant to provide additional peace of mind and the changes were implemented shortly afterwards, with the Accountant fully backing the changes. There are many varying factors to consider, different allowances and vehicles to assist with scenarios similar to the above.  No two cases are the same and if you feel you are in a similar position to the above, you are welcome to send an enquiry through whereby we can discuss if we are able to add value to your situation.