Flexible Drawdown for Income

Flight Safety International

Flightsafety International (FlightSafety) is the world’s leading aviation and marine training company.  They work diligently to maintain and enhance their reputation for customer service and for the industry’s most comprehensive safety training.  FlightSafety has built the world’s largest fleet of the most advanced full flight simulators in the market today.

As part of the ongoing service to FlightSafety, Creative Benefits (Creative) Wealth Management team hold regular clinics and one to one consultations with individual members of staff.

At one such clinic a member, with almost eleven years to go to his normal retirement date, raised an area where he needed some help. As well as being a member of the Group Personal Pension Plan which Creative had set up for the company, the employee had three different pension pots from previous personal plans with former employers. He wanted advice on whether he could utilise these funds to help clear mortgage and finance debts and at the same time to generate funds to help two children through university.

After careful discussion covering his personal situation and a review of the three funds a solution was found which enabled him to achieve his goals.

An option was income drawdown which allows for money to be taken from a fund, whilst at the same time leaving the balance of the fund fully invested. It was found, however, that this was not possible within the structure of the three existing plans. The first action was therefore to transfer all three funds into a new pension arrangement, with an income drawdown facility.

Once this was done the individual elected to

  • Take 25% Tax Free Cash (known as Pension Commencement Lump Sum) from the fund.
  • Take a monthly income from the remaining fund.

The result was twofold.

The Tax Free Cash was used to clear the mortgage and finance debts, therefore freeing money from monthly salary to use for his children’s education.

The monthly income received from his pension was used to fund additional pension contributions into the FlightSafety pension, using a Salary Exchange facility. This effectively will help to recreate the Tax Free Cash taken from the funds.

“I was impressed with the way in which Creative helped me”, said the member “I told them my problem, they thought about it, and then came up with a terrific solution”

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