PENSIONS 2013

Institute of Financial Accountants19 June 2013

Pensions and wealth management group

• AIM listed – market cap circa £46 million

• Established 1991 – over 20-year proven and stable track record

• Assets under advice and administration - £3.5 billion

• 270 staff; 54 consultants (offices in Leicester, London, Aberdeen and Glasgow)

• 6,000 small self-administered scheme (SSAS) and self-invested personal pensions (SIPP) clients

• Strong client retention - 98%

• “Through personal and proactive delivery of trusted advice, building long-term client relationships remains our core objective.”

• Changing rules 2014

• Pensions & business

• Auto-enrolment 2009 2010 2011 2012 2013 2014

Agenda

• Annual contribution allowance— £50,000 per year now— £40,000 per year 2014/15 tax year— £50,000 carry forward until 2013/14 used

• Some already in new rules!— Personal pensions – change 5 April 2014— Company scheme Pension Input Period?— E.g. 30 April = already £40,000

Changing pension rules

Lifetime Allowance

Maximum tax efficient value of pension Over LTA = no tax free cash/excess tax

= 55%

Was £1.8 million, now £1.5 million2014 = £1.25 million

Affected? Big pensions or long time to retirementDoctors/dentist promotions in public sector schemes £54,000

pension in NHS scheme = £1.25 million

Changing pension rules

New protection(s)

• Fixed protection 2014— Keep £1.5 million (cost = no more contributions)

• Personalised protection— Fund £1.25 million £1.5 million on 5 April 2014— Keep fund value to £1.5 million— Can contribute

Review clients – maybe apply for both?

Changing pension rules

Pensions & business

• Amalgamate pensions – new scheme

• New contributions (Corporation Tax Relief)

• Lend money back?

• SIPPs & shares in company

• Connected transactions

Uses of SSAS & SIPP

Loanbacks

• 50% of fund value

• Minimum rate of 1.5%

• 20% repaid per year – 5 years

• Contribution in = loan out

• Security

• Creative solutions (not lender of last resort) & re-scheduling

Only SSAS!

Small self-administered schemes (SSAS)

• Company owns property – has trading risk to property

• Sell to pension fund (SSAS & SIPP can borrow 50% of fund value)

• Lease back to business

• Rent = commercial lease (deduction from taxable profits)

• Property now owned by pension = secure

SSAS & SIPP - Property

• SIPP can use fund to acquire shares in connected company

• 50% of fund value is target maximum Risk Exit Pension not trading

• May go higher – case by case

• Effect = release capital to company & known investment risk to pension

• Tax issues? – taxable property

• Safest = service companies

SIPPs & company shares

• SSAS & SIPP can transact with family/member with company

• No loans to members/connected family

• Members/ companies can lend to schemes

• Problem = need cash but below age 55?

SIPP/SSAS solution = buy shares/land/property off client

• Market values

• Keep death benefit, 100% lump sum

Connected transactions

Auto-enrolment

• 49% of UK population saving for retirement• 50% who have a company pension scheme don’t join• What about State Pensions:

Ratio of workers to pensioners

1901 – 10:12005 – 5:12050 – 2:1

That’s why!

Why now?

• Know their staging date

• Decide on the pension arrangement to be used

• Assess their workforce

• Communicate

• Auto-enrol eligible jobholders and keep records

• Pay minimum contributions

• Post auto-enrolment (employer duties)

• Compliance (The Pension Regulator)

What do employers have to do?

Who get auto-enrolled?

Contributions?

Contributions?

Statutory Sick Pay

Statutory Maternity Pay, ordinary or additional Statutory Paternity Pay

Statutory Adoption Pay

Qualifying Earnings Include

Qualifying earnings are between: £5,668 - £41,450

Different definitions of earnings:• Qualifying earnings• Tier1 – Basic x 9%• Tier2 – Total x 85% x 8%• Tier3 – Total x 7%

Things we hear?

Employer Attitudes The Reality

We are OK, as we pay enough into our scheme

Every scheme needs to be looked at for various reasons

We will wait until the last minute as there is no rush?

The process takes a lot longer than most expect

We can produce the correct data no problem

Many have not!

NEST will do everything for us! NEST will not provide advice

We will just auto enrol everyone so we don’t need to worry

All workers need to be classified and communicated as required by tPR

We will just use the postponement option to delay

You can, for the contribution but not the communication!

Everyone will opt out anyway so it wont end up costing us anything

Current opt out rates are low, and the costs increase for employers

The Kudos process?

Kudos auto-enrolment support services outlineInitial client engagement• Stage 1 Report – Staging dates

Detailed scheme review and initial cost analysis• Stage 2 Report – Current analysis & cash flow options

Consultancy Decisions• Qualifying scheme(s) options• Postponement (all employees or part)• Definition of pensionable salary• Method (qualifying earnings or self certify)• Recommendation • Build, test & Implementation• Communication solutions (generic or bespoke advice)• Software administration solution: , pension provider or in-house

Solving the problem

• Stage 1 report – Staging dates = freeHelp you solve clients questions

• Stage 2 report – Scheme review & budgeting1. Kudos report direct2. White label with you

Minimum 10 reports + £250 minimum per report (disbursements on top).

Add in your own time!

Any questions?

Disclaimer

The views provided in this presentation are for general information purposes only and represent the opinion of the authors based on market conditions at the time of writing, which are subject to fluctuations, and interpretation of current and proposed legislation and HMRC practice, which are subject to change. Nothing in this document represents investment advice of any nature whatsoever, and it does not constitute an offer or solicitation to purchase or sell any financial instruments. Accordingly, to the extent permitted by applicable law, Mattioli Woods plc and Kudos Independent Financial Services Limited do not accept any liability or responsibility for the information contained in this presentation or any investment decision or other action that may be taken in reliance upon the information contained in this presentation. Mattioli Woods plc and Kudos Independent Financial Services Limited accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to their assumptions. Mattioli Woods plc. Registered in England No 03140521. MW House, 1 Penman Way, Grove Park, Enderby, Leicester, LE19 1SY.

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