Fred ‘The Shred’ bringing retirement planning to the fore!

Sunday, 1st March 2009 14:04 - by Resident IFA

Sir Fred ‘The Shred’ Goodwin, former Chief Executive of Royal Bank of Scotland (RBS), is to receive £693,000 pension income each year for the rest of his life…providing Gordon ‘The Dread’ Brown doesn’t have his wicked, yet obviously appropriate, legal way. I do not know how long Fred was Chief Exec of RBS, but the rewards look pretty good, don’t they?! Nearly £700k per annum looks even better when, if Fred gets his ‘three-score years and ten’ life expectancy, he will have trousered a taxable total of £13,860,000!! I would hazard a guess that this doesn’t include any lump-sum the 50-year old’s pension may provide or any other pension, or pseudo-pension, arrangements he has in reserve. Obscene…well what other word is appropriate for a person who arguably helped bring RBS to its knees? By-the-by, the one positive out of all this is the publicity he is inadvertently providing for pensions and retirement planning for those not as fortunate as he. Two quick scenario’s for your delectation: 1. Mr.A has a £75,000 personal pension fund. He is approaching retirement in a couple of month’s time. His existing personal pension provider sends him an ‘offer’ of a retirement annuity (income). What does he do? Quite simply, seek professional advice. An Independent Financial Adviser (IFA) can talk him through the available options, sourcing the highest and most appropriate income from all providers in the marketplace. His existing pension provider may well be able to amend their figures from the standard industry illustration – Single life, Level income, Guaranteed (to the annuitants Estate upon their death) for 5 years – to his or her tailored preferences, but are still unlikely to be the most competitive i.e. provide the highest income. The IFA can run through all the relevant factors. These include Health, Spouses pension considerations, Indexation of income options, etc. Take health, for example. If a person has, what are nowadays, relatively minor medical problems such as taking a couple of controlling tablets for high blood pressure or cholesterol, they may see a 10% or better increase in the income received by seeking an ‘Impaired-life’ annuity instead. Their existing provider may not even provide such an option. All this from consulting an IFA…they don’t bite…well, only in a playful manner! You can seek out local IFAs by checking either the FSA’s website (moneymadeclear.fsa.gov.uk) or unbiased.co.uk 2. My second example revolves around those who have a pension fund of, usually, £100,000 or more who were approaching retirement and have been hit hard by the nightmare plunge of the stockmarkets in the last 16 months… …but I will leave this for next time. In the meantime, please keep abreast of financial affairs and issues, especially yours!