by Mark Davies at The Fry Group
Guaranteed lifetime income, able to support lifestyle in retirement is a basic requirement, yet most of us are or will be relying on savings to supplement pensions with no guarantees.
The wealthy should have sufficient to meet their needs, however even substantial capital sums erode over time by low interest rates, inflation and/or poor investments.
Annuities can guarantee income but they are expensive, offer no investment upside, give no capital access and normally die with the annuitant.
The good news is that there are products, with associated investor protections, that provide guaranteed growth rate and additional investment growth potential until income is taken. When/if the income is taken, a guaranteed lifetime income is available. The guarantees are provided by a major international institution and backed by their assets.
Income can start immediately or when required. Capital, both before and after taking income is invested in equities, bonds and cash allocated based on individual needs and attitude to risk. Resulting investment growth will increase for life the level of guaranteed income available, but there is no downside risk to the income level. The capital value of the plan is fully available during the lifetime of the plan holder and is also available in full on death.
The products are not designed for early encashment so should be regarded as a long-term commitment.
Most products are effective for UK Inheritance Tax reduction if held within a discounted gift settlement (DGS). A DGS is accepted by HMRC as reducing UK Inheritance Tax liabilities. Importantly unlike most gifts/trusts, which must exclude the giver from any benefit to be effective for UK IHT reductions, the guaranteed income can still be paid to the giver for their lifetime. To obtain the favourable IHT treatment access to capital is not available, however as the structure is treated by HMRC in the same way as a type of annuity, this is taxed very favourably in Spain.
Please note this is a precise of the key features and independent financial advice should always be taken.
For further information Contact Mark Davies. [email protected]
Tel – 952 768 450.