Opining not advising
This week Investment Owl helped a client NOT to lose £35k. The thirty-five grand in question seemed entirely secure to him. It was sitting in a small personal pension making 2% per annum with a well-known Life Assurance Company and although he is nearly seventy, he has never taken cash or drawn a pension from it because he doesn´t need to. And that is why he and his family may lose every penny of it when he dies.
The gentleman in question is not married and has been retired for some years. He is taking an income from another pension and has a lot of cash and assets. The £35k personal pension clearly states that if he is retired and unmarried then his funds revert to the life assurance company on death. There may be a case for arguing that because he did not draw on it then it should be passed in its entirety to his estate (where it will attract 40% IHT) but legally every penny will go back to the fund manager.
Instead, we have connected him to an IFA who will analyse his options, draw 25% of the pension tax free immediately, and invest the rest with a target yield of 6% per annum. And put the funds into a wrapper that means they then can be passed to his sons free of Inheritance Tax.
You might ask how a life assurance company can write to its client every year, fully aware of his age, and not suggest some options or arrange for advice as we have.
Investment Owl is not a pension expert. We are not an advice business. We are product experts. And the best thing about being a product expert but product independent is being able to tell the truth. Which in this case is that as an investment, an income generator and a tax vehicle this £35k was invested very badly.
Not for much longer.