The value of investments and any income from them can fall and you may get back less than you invested.

The PAG report: 5 ways a financial planner adds value

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It has been a privilege for Brewin Dolphin PLC to support the important work of the Pension Advisory Group (PAG).

The final report can be accessed here and the executive summary can be found on page 2.  

The relationship between a family solicitor and our financial planners begins at the early stages of a financial settlement.  Here are 5 ways that our accredited financial planners can add value to a solicitor’s case and ensure that the solicitor observes compliance with the recommendations of the PAG report.

1. Pension specific information

The report indicates that the client will need to have been given information about specific features of their pensions, we can easily advise on the significance of these details and inform solicitors and their clients of the inherent risks. This will include, but not be limited to:

  • Types of pension;
  • retirement ages;
  • benefits lost on pension sharing;
  • pension fund charges;
  • moving target syndrome;
  • clawbacks, and
  • income gaps.

2. The Pension Sharing Annex (Form P1) - Regulated advice

Our accredited financial planners can give regulated advice about the destination funds for pensions to be shared. Solicitors are warned not to give financial advice, but when completing section F of the pension sharing annex solicitors could be giving financial advice and this should be avoided at all costs. Not doing so could leave solicitors open to a claim being made against them for providing regulated financial advice.

3. Wider pensions considerations

PAG recommends parties need to have clearly understood the following matters which are often intrinsic to a divorce involving pensions:

  • the implications of Pension Freedoms 2015;
  • complications concerning final salary schemes and their cash equivalent values;
  • unfunded Defined Benefit schemes;
  • closed schemes, and
  • AVCs.

4. Helping to instruct your chosen expert.

PAG’s final report recommends that the possible instruction of a pension on divorce expert (PODE) be considered as early as possible. Our accredited financial planners can act as a shadow expert or a financial neutral and help with an early evaluation of complex pensions matters such as:

  • to help the client identify their financial outcomes;
  • to give advice as to whether a pensions report is necessary, and if so,
  • to advise what questions family solicitors should ask of the PODE,
  • to provide advice on the contents of any report,
  • its implementation, and
  • a destination scheme where appropriate.

5. Lifetime allowance issues.

The lifetime allowance (LTA) usually involves regulated financial advice, PODEs may find that it sits outside the scope of a report. Lack of attention towards LTA issues can cause unnecessary tax liabilities for pension members in receipt of a pension sharing credit. An accredited financial planner will help to mitigate this problem by reviewing the position of both spouses to assist the parties to effectively negotiate in the knowledge of the tax consequences.

Solicitors should contact our accredited financial planners if they would like some guidance in any case where pensions are an issue.

Matt Sullivan
Head of Professional Services

 

 


The value of investments and any income from them can fall and you may get back less than you invested.

Please note that this document was prepared as a general guide only and does not constitute tax or legal advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Tax treatment depends on your individual circumstances; therefore you should not rely on this information without seeking professional advice from a qualified tax adviser.

The opinions expressed are not necessarily those of Brewin Dolphin Ltd.