Definitions

What is a Discretionary Fund Manager?

A discretionary fund manager is a professional third party manager who invests a clients capital based on various criteria including risk profile, ethics etc. Many financial planners will outsource some of their investment process to discretionary fund managers to ensure that they receive the maximum amount of attention and expertise available.

What is Income Protection?

Income protection insurance is a long term policy that pays a regular weekly or monthly income when the insured becomes unable to work because of a long term illness or incapacity. As long as the insured keeps paying the premiums and complies with the conditions, the insurer cannot cancel the policy or increase the premiums, regardless of how many claims are made.

What is a Lifetime Annuity?

A lifetime annuity is an income contract bought from an insurance company in return for the payment of a lump sum of money. The amount of income that can be provided will depend on the size of the fund and the annuity rates available. The annuity rate itself will depend on the individual's age, health, sex and the options selected (i.e. spouses or dependant's pension, guarantee periods or escalation of the benefits in payment.)

What is Pension Income Drawdown?

Income Drawdown allows you to take income from your pension fund while the fund remains invested and continues to benefit from any fund growth. You generally need a larger fund value to take pension income drawdown. There are two types of Pension Income Drawdown, a) Capped drawdown, which limits the maximum income an individual can take from their pension. b) Flexible Drawdown - if you have a minimum income guarantee of £20,000 gross p.a. you are not limited by a maximum amount. You can take as much from your pension as you like, subject to PAYE.

What is Phased Retirement?

Phased Retirement is the process of 'crystallising' a pension fund in phases, rather than securing income at once through the likes of an annuity. This means that only a part of the pension fund is converted in to income each year and normally the tax free sums will be utilised in the early years. This can create a highly tax efficient income stream while the remaining fund remains invested and can benefit from growth.

What is a SSAS (Small Self Administered Scheme)?

SSASs are defined contribution occupational pension schemes aimed at company directors and senior employers. A SSAS must have no more than 12 members and each of them can be trustees. A SSAS can invest in a wider range of investment than a personal pension and include commercial property, land, shares and commodities.

What is a SIPP (Self Invested Personal Pension)?

A SIPP is a personal pension scheme that has a much wider choice than the traditional personal pension in investments and also in taking the benefits. A SIPP can invest directly in compliant shares or can be used to purchase commercial property. In, addition a SIPP is permitted to borrow money.

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