Chapter 10 Flashcards
Factors for Retirement
Large Capital Need
Liabilities to Repay
Beneficiaries needs
NOT ATR
What is the max growth rate for projections
There is no maximum
Do not have to include auto enrol contributions if there aren’t any
Which retirement options is best suited to a switch to fixed-interest
An annuity
What can a client do if they don’t have enough to retire
Increase contributions, downsize, more aggressive investment, delay retirement, phase retirement
The higher growth rate assumed (taken on) then the lower level of contribution needed for target income
What are the Accumation factors for ATR
Timescale, other inv (diversification), how going to take benefits (i.e. flexible or annuity)
Default is not likely to be the best option
Where is a Medium/High Investment profile invested
A significant amount in asset-backed investments
A significant amount in higher risk
Very little (small proportion) in mixed fund - WP/Managed
Up to 20% in Higher risk
What is Screened ESG investing
Have religious, ethical or personal values that wish to be reflected in investment
Exclude certain companies
NOT maximise investment whilst also in ESG
How long is a long dated gilt?
15 years (at least over 10), short-dated are 7.
Return is not always above inflation
Fixed-rate of interest - coupon
Redemption value is fixed
Gov’t backing so secure
Known income stream so safe haven in stock market uncertainty
Features of WP fund
Bonus can not be taken away
Terminal bonus not guaranteed
Invests in all asset classes
Features & Disadvantages of Lifestyle fund Vs Target Date
Lifestyle - 5 - 10 years before automatically moved
Lifestyle - Switch at pre-set times so no allowance for market conditions
Target - can switch to new fund with new retirement date/aligns with retirement date (assumes being drawn on this date)
Target - Actively managed so changes gradually.
Target - No minimum level of income
SIPP - what is tangible moveable property
can self-manage - no residential property, wine, beach hut, cars, art/antiques, personal chattels, exclude certain business assess under £6k
Limits on investing in sponsoring company (SASS)
Limits do not apply to contract-based SIPP otherwise
5% in any one employer
under 20% where more than one employer
Calculated at time scheme pays for shares
No restrictions on the amount of shares owned (i.e. 100% as long as valued less than 5%)
Loans to sponsoring employers from Occ schemes
NOT for contract-based SIPP (cannot lend to own business)
Cannot exceed 50% of NET value on date granted
Market value + aggregate value + uncrystallised value MINUS existing borrowing
Loan secured as 1st charge with value plus interest
Minimum Interest of 1% above average base rate of 6 main banks - rounded up to higher of 0.25%
Not more than 5 years although can roll over once for another 5 years
Must be repaid in equal installments of capital & interest
Borrowing by SIPP
Can borrow for Investment purposes - Contract & trust based SIPP & SAPP
Limit of 50% net assets before the loan
Take the loan off twice if existing borrowing.
What factors at review affect income need in retire
starting State Penson
Selling house/downsizing
Inheritance
