Planners, Pensions

 

When you start the pension planner you’ll be presented with a “Select Client” dialogue, where you may click the “Clear Plan” button to start a totally clear plan except for the default or standard values you’ve set. Alternatively you can select an address set and then use the search buttons to re-find an existing client, in which case all of that client’s details will automatically be loaded into the planner when you click the “Accept” button.

 

 

Some fields are based on your defaults (i.e. the inflation rate, the interest and annuity rates, and the percentage of retirement salary desire as pension). Others are taken from the client’s record…

 

Individual Clients screen…

                        Search name

                        Date of birth

Fact Finds…

Personal Details screen: Sex and Retirement age

Annual Income Details screen: Net income (N.B. Estimated salary at retirement is also based on this figure)

Policy screens…

Policy details

 

WARNING! You may have user-definable fields on the Individual Clients screen set-up for salary, sex and/or retirement age, etc. The planner will not use these fields, as by definition they are user-definable and their meaning could vary.

 

WARNING! Many of the figures on this screen are derived from default values and tables previously set-up. To change the default values see “Planners, Default or Standard Values”.

 

On the first screen of the planner, shown below, enter values in the “Personal Details” section. If for example, the client is currently a corporal in the army earning (say) £20,000 p.a. he might reasonably expect to retire as a sergeant on (say) £30,000. This £30,000 is his “Estimated salary at retirement”, which should be entered at today’s prices. If he’s currently 40 years old and not retiring until he’s 65, in 25 years time, then if you click the “See figures at Retirement Prices” button these will both be increased by the displayed “Inflation rate” (say 5% inflation results in £67,727 and £101,590 respectively). As you click this button it will change to read “See figures at Today’s Prices”, and you should click it again to leave it showing today’s values.

 

 

The “Assumed Rates” section will be pre-loaded with your own default, or standard, values. To change these see “Planners, Default or Standard Values”. In this section you should enter an assumed inflation rate, followed by a standard interest rate for the existing pensions. When you subsequently enter the details of the individual schemes on the following pages they will each default to this value unless you choose to override it.

 

You should also select an appropriate “Pension annuity rate category” from the drop-down (e.g. “Male 65”), which will result in a “Pension annuity rate” (e.g. of 8%) appearing when you click the “=” button next to that prompt. The system will check the relationship of the rates you have chosen and ensure that they don’t exceed limits set by the governing body. You can edit the table of default annuity rates by clicking the “Adjust” button.

 

In the “Pension Details” section you should enter the percentage of salary at retirement (e.g. the £30,000) that your client would like to retire on (e.g. 50%), which cannot exceed the set maximum (e.g. 66%). The system will then automatically display the desired net pension (e.g. £15,000) before any state contributions. You should then enter the state pension (e.g. for a single person) or get the system to suggest it by clicking the “=” button next to this prompt. This figure is derived from a table, which you can edit via the “Adjust” button. Having entered the state contribution, you’ll be left with the “Amount to be covered” by private schemes, provided there are any, details of which you have to enter on the next screens, as shown below. Press the PgDn key, or click the black “Curve Right” button on the toolbar to proceed.

 

 

If the system CAN find existing policy information it will pre-load it, as shown above.

 

 

If the system CANNOT find any existing pension policies for the client in question it will prompt you to choose the type of scheme from a drop-down in the “Existing Schemes” dialogue, shown above (e.g. Active personal pension, Paid-up personal pension, etc). This dialogue also appears if you click the “Starburst” or “New” button to add an extra policy to the plan.

 

Provided you’ve selected or the system has pre-loaded a scheme type (e.g. Active personal pension) you should then enter or edit its details. Enter the insurer/scheme (e.g. Scot Amicable Maxiplan), the retirement age (e.g. 65), scheme interest rate (e.g. 7%), first and final years for contributions, whether the premium is monthly or annual along with its amount (N.B. use the scheme type “Lump sum contributions” for single premiums). Enter the premium increment rate (e.g. 5%) if this has been pre-set to increase annually, and whether the resulting pension will itself be index-linked, or fixed. The system will then display a currently estimated value for the scheme. Next you should enter scheme overrides for the maximum amount that may be taken as a tax-free lump sum, the actual amount that will be taken, the annuity rate and the last known value, if any, on its date. Then click one of the following buttons…

 

The final screen, as shown below, will show the “Total fund available for annuity” from all the schemes, along with the total “Tax free lump sum taken” and the “Remaining funds available for annuity”. All these figures are shown at retirement date prices according to your estimated inflation rate, unless you click the “See figures at” button, in which case they’ll be shown at today’s prices.

 

 

You’ll also see the estimated annual pensions, divided into totals for the index-linked and the flat rate ones. The notes on the right side of these should help illustrate to your client the problem with flat rate pensions.

 

The middle fields show the amount of pension to be covered by private schemes (as agreed on the first screen) and the resulting shortfall, if any. Finally the last section of this screen shows how much extra contribution is required to meet this shortfall, using the default interest, inflation and annuity rates, as entered on the first screen (N.B. the increment rate is matched against the inflation rate).

 

When you are satisfied with it you can save the plan, then subsequently re-find it, as described in “Planners, Saving, Re-finding & Deleting”.

 

To print the completed plan…