Introduced by George Osborne in April 2015, pension freedoms have undeniably and completely changed the retirement landscape. As we now approach the third anniversary of the implementation of the pension freedoms; one of the most radical overhauls of pension policy in living memory, City Wire 's New Model Adviser commenced its pension freedoms MOT series by asking six leading IFAs, notably Montfort's Eugen Neagu, on how they have transformed clients’ lives through the freedoms. 

"This is an example of advice that would have been improved by the freedoms, but the case came a couple of years too early.

A client approached us in 2013 when he was 55. He had a pension pot totalling just over £680,000 and had spent many years in the Far East. He met and married a local and subsequently decided to retire there. Initially he only needed £18,000 per year, owing to much lower living costs in South East Asia. This amount was comparable to the early retirement from his defined benefit pensions with a top-up from his money purchase pensions.

After a year he came across a local business opportunity. The village his wife originated from held no facilities to dry rice. Our client estimated he needed £300,000 from his pension for things like a facility and a fleet of trucks to transport the rice, and enough capital to buy the rice from villagers.

His plan was incredibly impressive. But back then pension flexibility was only available for retirees with a £20,000 minimum guaranteed income. A £20,000 pension annuity would have cost him more than £400,000, which would have left him with few funds.

As a result, the maximum our client could withdraw was a 25% pension commencement lump sum followed by capped pension drawdown using GAD rules. We had to recommend a transfer of some of his funds to a qualifying recognised overseas pension scheme and incorporate flexibilities available in other jurisdictions.

The frustrations of this case highlight the inflexibility before the pension freedoms were introduced. Our client’s business has gone from strength to strength and is turning over more than £1.1 million with a net profit of 15%. His decision was good but undoubtedly it would have been easier post-pension freedoms."

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Should you wish to discuss your pension and the associated freedom you may be considering, please get in touch with Montfort via; +44 (0)1483 202072;

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