Pension Case Studies

Problem

Alexander had an occupational scheme valued at £3.5m, had reached his Normal Retirement Date of 60 in February 2006, and was considering partial retirement. He owned his own company and planned to retain his Directorship and, therefore, his employed status. His pension was not his main source of income but he wished to benefit from it at that point. He was concerned about the impact that the new pension legislation would have and did not know how to proceed.

Solution

An initial assessment of Alexander's situation showed that he should first maximize his existing pension fund by his company contributing a further £250,000 in that business year ending March 2006. Alexander's company made the pension contribution immediately and was able to benefit from Corporation Tax relief through the company accounts for that year. We then reconstructed Alexander's current benefits into an arrangement that allowed him to continue in employment while taking benefits. This move also protected Alexander's pension fund from the effects of the legislative changes which took place on 6 April 2006.

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