Flexible pension planning

Summer 2005

Any furtive glance at a national newspaper will highlight that the global pension industry is in crisis. More and more people are discovering they will need to substantially increase their pension contributions or face working on into their seventies to avoid an impoverished old age.

Longer life expectancy coupled with poor investment returns from falling markets and expensive investment products has caused annuity rates to fall dramatically. It is calculated that the UK alone has a personal savings gap of over £30 billion, with the shortfall from many corporate schemes being even greater.

Many existing pension schemes are both inflexible and inefficient, with limits on the amount that can be paid in each year and restrictions on when withdrawals can be made. In addition, increasing government interference makes it very hard to ensure your pension plan keeps up with the changes.

At Fairbairn Private Bank, we can offer a tailor made pension solution for Isle of Man residents and international expatriates. Our pension structure is recognised under Isle of Man legislation and is offered through local pension specialists. It takes the form of a self-managed pension that is held within our award-winning Focus account and presents an attractive and transparent alternative to a trust or life policy.

As the pension is self-managed, it allows you to construct a portfolio of cash and investments that best suits your individual requirements. It provides a cost-effective and tax-efficient means of retaining control of your assets and combines this with flexibility of contributions and the opportunity to determine your own retirement age. As your needs change, or stock markets and interest rates fluctuate, you can adjust the composition of your portfolio in response.

Tax relief and tax efficiencies may be available dependent on your residence status, but the pension can offer other advantages above a traditional insurance company pension. Our pension wrap can avoid the need for probate and can aid succession planning by providing more direct control than a traditional trust. Unlike offshore trusts, you are not forced to hand your assets over to the control of trustees and assets can be passed to whomever you wish, in the event of death.

In addition, the pension is entirely portable and can be used as a long term planning vehicle. The integrated Focus structure also serves as an ideal “wrapper” product for other private banking services.

If you have a minimum of £50,000 of cash or stock to invest in a pension, and would like more information on how you can manage your own pension fund, please call our client services team.