New!

pensionForward - the essential pension, tax and benefits advice system

“What you take from your pot won’t be what ends up in your pocket.”

While the new pension freedoms offer wider options to many people, understanding the effects of those options can be difficult; but vital.

In a system where there can be a penny for penny reduction in benefits for additional income, or where a few pounds extra capital can mean a reduction in income of hundreds of pounds a month, making a mistake can be very costly for both client and adviser.

pensionForward is the essential tool for those advising people under the new pensions freedoms. It combines comprehensive means tested benefits and tax assessments with detailed assessments of the impact of taking capital or income from pension schemes.

Full graphical and tabular reports enable advisers and clients to immediately understand the impacts on overall income of their options for making use of their pension savings.

It comes complete with specialist reckoners for assessing the effect of emergency tax applied to withdrawals, calculating the original gross value of income paid net and for determining the notional income value from pension savings.

As part of the system, users receive, free, Ferret’s detailed e-learning courses on means tested benefits and on pensions, tax and the benefits issues, including the practical problems such as deprivation of income and capital and assumed notional income from pension pots.

Information Needs

If they are to make the best choices from their options, clients will need to understand:

• Their current tax and benefits situation
• The effect on their overall income of the options open to them – immediately and in the future
• The effect of taking different amounts of income and capital from their possible options
• What would be the effect now and in the future of planned or unexpected changes in circumstance

This is what pensionForward helps you to do - quickly, easily and accurately

Income Entitlements Check

Government figures show that over a third of people entitled to Pension Credit don’t claim it (over 50% of home-owners) and around 45% don’t claim Council Tax Reduction. Making decisions without understanding what the current entitlement to support is, or what probable future support will be, can be extremely dangerous. Ensuring that people understand their entitlement to support allows them to be aware of the consequences on those entitlements of any reduction caused by their various pension options.

The Effects of Alternative Options

“… the options relevant to that consumer should be discussed, alongside the key facts and consequences for each. While not exhaustive, the broad categories of options include:

• Taking income via a formal retirement income product; for example, an annuity or drawdown product (including other income generating products that may emerge).
• Taking cash, which could be used for any purpose including providing ad hoc income or a rainy day fund.
• A combination of these options.
• Not taking any action at that time”

Experience has proven that in this kind of guidance, considering the effects of a choice, it is vital to offer the information over a range of possible amounts.

The combination of tax and benefits rules can mean that it is easy for there to be no real increase in income when taking money from a pension pot. Often the penny for penny deduction rules in benefits just wipe out any income taken whilst extra capital can stop entitlement to benefits completely. Looking at the results over a range of income levels or capital amounts can illustrate the effects and allow the adviser and client to avoid any danger areas and recognise their best options.

The Details

• Simple to use

pensionForward collects the information about the client in a simple question and answer format with notes facilities and with an intelligent dialogue which asks only relevant questions, provides comprehensive context sensitive help and offers intelligent default answers. Cases can be saved and reviewed easily, linked to existing SQL databases, and the system can be used across networks. The ease of carrying out ‘what if‘ calculations makes it simple to examine possible changes of circumstance or alternative options.

• Comprehensive means-tested benefit and tax credit assessments for those above and below pension age

The assessment of entitlement is shown in an expandable summary form and reports can be produced for the adviser and case record with detailed calculations and for the client in an easy to understand form.

Capital withdrawal only with 25% tax-free allowance Capital withdrawal only with no tax-free allowance Capital lump sum and income with 25% tax-free allowance only on the capital and income taxed normally Capital lump sum and income with 25% tax-free allowance on capital and income Capital lump sum and income with no tax-free allowance, both taxed normally Capital lump sum and income with no tax-free allowance on capital and with income paid net of tax Capital lump sum and income with 25% tax-free allowance on the capital and income paid net of tax Income only with 25% tax-free allowance Income only with no tax-free allowance Income only paid net of tax Comprehensive tables and charts of results Effect on benefits across the range of income and / or capital assessed Bottom line income after assessing effect across ranges of income, capital, tax and benefits

pensionForward’s range forecasts provide the details needed to quickly assess the most advantageous options for the client. Bringing all the calculations together and displaying them, in both detailed tables and easy to understand graphics, makes understanding the final effects of any choices simple.

The tables, with user chosen start and end amounts, provide the detail of the tax assessments, taking account of the 25% tax-free allowance, and then go on to look at the effect on any means tested benefits and on overall bottom line incomes.

Any important changes in the effect on the client are clearly flagged so that the user can focus on them.

The information from the table is also shown in graphical form, where the top line shows the overall level of income and the different income types which make it up are shown clearly.

The output covers pension withdrawals of income, capital or both and is produced for cases above and below pension age.

Local Council Tax Reduction schemes for English LAs plus Scotland and Wales as well as Northern Ireland Rate Rebates. Increasingly there are variations of benefits schemes in English local authorities as well as in Scotland, Wales and Northern Ireland. PensionForward applies local variations and schemes where details are available.

• Net amount of pension received after Emergency Tax Code applied
• Notional income from pension pot for benefits purposes
• Gross value of pensions paid net of tax

Understanding the short term effect of the new rules as well as the longer term effect is important. Many people will want to make use of their savings for immediate needs. Others will want to keep their savings in place but may be affected by the rules which treat the pot as producing a notional income for benefit purposes. PensionForward includes a number of ‘reckoners ‘, useful calculators that help with understanding these effects.

• eLearning course on pensions, tax and benefits
• eLearning course on means-tested benefits

While pensionForward makes the calculations and options simple, it is important that advisers understand what the processes are and what lies behind them. Ferret has a long background in face-to-face training in this area, and in producing e-learning courses. As a part of the pensionForward service users are given, free, access to courses in means tested benefits and to a detailed course on pensions, tax and benefits which includes such important areas as the rules on deprivation of income and capital.

• Helpline service

Ferret operate their helpline service to assist with not just queries on system usage but also to help with questions about benefits assessment and entitlement.

PensionForward

pensionForward is the essential tool for all those advising people about their options concerned with pensions. Benefits advisers, financial advisers, those working with older people and social landlords will find the system invaluable and inexpensive. The updating service ensures that it is always up-to-date and accurate.

Evaluation copies are available, please email info@ferret.co.uk for more details.