One in five in danger of breaching pension lifetime limit – Albion survey

Advisers estimate that one in five (19%) of their clients is in danger of breaching the reduced pension lifetime limit by the time they reach retirement age, according to a new study commissioned by leading venture capital investor Albion Ventures.

The research, which was commissioned among 151 intermediaries in January 2014, also highlighted that 57% of IFAs are particularly concerned about higher earning younger clients breaching their lifetime limits and are advising them to diversify their retirement investments.

Over two thirds (68%) are advising clients who are in danger of exceeding the limit in future years and 56% are dealing with clients who will do so this tax year, the research also showed.

To highlight the potential impact of the reduced lifetime limit, Albion has calculated that a 40 year old who plans to retire at 65 and who currently has a pension pot of £351,551 can make no additional contributions without expecting to breach the £1.25m threshold.

The survey also showed that advisers were pessimistic about what will happen to the lifetime allowance limit in future: over four in ten (41%) anticipate that it will be reduced further compared to just 7% who think it will increased. However, almost a quarter of advisers (23%) predict it will be inflation-linked.

Patrick Reeve, Managing Partner of Albion Ventures said: “The reduced pension lifetime limit will ensnare a significant part of Middle England and the findings clearly show how many advisers are taking action on behalf of their clients. Diversification has become a retirement watchword and as a result VCTs are becoming an increasingly popular pension supplement, particularly given their ability to deliver a regular tax-free income.”

 

Lausanne    

InvestmentEurope is delighted to announce the Spring Pan-European Fund Selector Summit, to be held 9-11 April 2014 at the Beau Rivage Palace, Lausanne, Switzerland.

Click here for further details: http://events.investmenteurope.net/summit

 

 

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