Professional Adviser Debates
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Helen-morrissey-80x80 Moderator

Helen Morrissey

Moderator

Moderator

This has been an incredibly close run argument the whole way through and at no point during the debate did I ever have a clear idea as to who would win. I would like to thank both Marlene and David for their well thought out arguments over the past five days. I think what has come through loud and clear is that both income drawdown and UFPLS are likely to play an important role in the retirement planning of many people come April 2015. Each option will suit different people with different retirement income needs.

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Closing Statement

Proposer Marlene-shalton-ifp-80x80

Marlene Outrim

Managing director, Uniq Family Wealth

In the blue corner

UFPLS is the simple solution for those who have straightforward needs and uncomplicated circumstances. I would argue that few are in this corner and it is only going to become more complex over the years, as people move in and out of jobs, change status from employed to self-employed (or even unemployed) and move around. Coupled with this, we have the introduction of auto-enrolment and the decline of DB schemes. Who knows, in ten years' time, maybe even less, how the rules may change again?

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Opposer Trenner-david-cutoutweb-80x80

David Trenner

Technical director, Intelligent Pensions

In the pink corner

The new pension freedoms will give people the chance to make poor decisions. Many folk will find that their pension fund expires before they do. Others will be encouraged to withdraw money from their pensions to invest in unregulated investments - and these could be funds which lose them any money remaining after they have paid significant fees!

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Rebuttals

Proposer Marlene-shalton-ifp-80x80

Marlene Outrim

Managing director, Uniq Family Wealth

In the blue corner

It doesn't surprise me that the vote is now so close. Of course UFPLS will be attractive to many people; gaining access to a fund that was hitherto restricted. One could argue that it will only be those with smaller pots who are more likely to take advantage of the new facility and those with large funds will access them through capped drawdown. However, IT ALL DEPENDS...and that is the problem with guidance, advice or whatever, everyone's circumstances will differ. If a person doesn't seek advice, then they will decide in ignorance or with limited knowledge, and the impact of that may not be felt until some time to come.

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Opposer Trenner-david-cutoutweb-80x80

David Trenner

Technical director, Intelligent Pensions

In the pink corner

However you view this debate, I think Marlene and I are agreed on two things: the options available after April will be complex and for most people advice will be imperative! For the vast majority - perhaps as many as 98% of clients - the reduced annual allowance of £10,000 will not be an issue: most people simply do not have that much available for investment into pensions. Similarly there are very few who have primary or enhanced protection with protected tax free cash.

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Guest Phase

Cochran-robert-scotwid-80x80 Chris-fry-80x80

Robert Cochran

Key accounts pension development manager

Guest

Having read the two arguments I think we can safely say the position is summed up in Marlene's opening sentence "the new rules are decidedly complicated".

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Opening Statements

Proposer Marlene-shalton-ifp-80x80

Marlene Outrim

Managing director, Uniq Family Wealth

In the blue corner

UFPLS is phased drawdown by another name, however complicated by the restrictions. Those that might want to use it may still be restricted. For example, those with enhanced or primary protection, which includes a level of protected tax-free cash, will not be able to use UFPLS. If a client wishes to take PCLS but not take the whole of the fund or does not want to take any income then they will have to designate funds as available for drawdown taking 25% tax free cash (TFC) and nil income. There is no TFC payable in relation to an UFPLS. For one to exist there must be an entitlement to income i.e. drawdown or annuity (or Scheme Pension), which is why it is described as a tax-free element rather than TFC.

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Opposer Trenner-david-cutoutweb-80x80

David Trenner

Technical director, Intelligent Pensions

In the pink corner

When it comes to retirement income successive governments, HMRC and regulators have certainly done their best to confuse customers! Now from April 2015 clients will have to choose between Capped Drawdown – provided that it started before 06/04/15 – Flexi-Access Drawdown (FAD) or Flexible Lump Sums (FLUMPS), also known by the catchy acronym UFPLS (Uncrystallised Funds Pension Lump Sum).

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Chris-fry-80x80 Helen-morrissey-80x80

Helen Morrissey

Editor, Retirement Planner

Moderator

April 2015 marks a watershed moment in retirement planning as the changes announced in the last Budget come into force. Retirees will have unprecedented flexibility in how they take their retirement income. Both UFPLS and income drawdown have their pros and cons and in this online debate Intelligent Pensions technical director David Trenner puts forward the case for UFPLS. Uniq Family Wealth managing director Marlene Outrim outlines the case for income drawdown.

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About this debate

April 2015 marks a watershed moment in retirement planning as the changes announced in the last Budget come into force. Retirees will have unprecedented flexibility in how they take their retirement income.

The number of annuities purchased is expected to decrease markedly as more retirees look to take advantage of solutions such as income drawdown and uncrystallised funds pension lump sum (UFPLS).

Both UFPLS and income drawdown have their pros and cons and in this online debate Intelligent Pensions technical director David Trenner puts forward the case for UFPLS. Uniq Family Wealth managing director Marlene Outrim outlines the case for income drawdown.

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