Contributions to Savings and Investments - Capture future surplus income through planned savings, investments

Schedule Future Contributions to Savings and Investments 

Even if surplus habitual income is set to be assumed spent, you can still have proactive planning discussions with your clients and model the effect of future savings and investments. Planned future contributions can be set to capture some, if not all unallocated income, thereby allocating it to specific accounts. This process encourages a discussion with your clients about where they might best invest or save their future surplus earnings.

The black line running across the cash flow chart is the total need line. This line represents your client’s total annual taxes, expenditure, and any planned savings and investments that are being met successfully in that year of the plan. When a bar of the cash flow chart exceeds the need line, this indicates either unallocated surplus or in some cases liquidations and transfers. If you deposit previously unallocated surplus into investments and savings, the black need line will rise to show that this surplus income is being captured through planned contributions.

1. To set regular contributions to a savings account, go to the SavingsInvestments or Pensions > Money Purchase screen. 

2. If the account is already entered into the plan, select it first in the ledger to the right side of the screen.

You could also create a hypothetical future investment to which future contributions will be scheduled. If the account does not currently exist, simply create an account with a zero balance, at present. This empty account will later be filled with planned future contributions, provided the funds are available.

3. In the Contribution £ field:  Enter the annual contribution amount or set contributions as a percentage of the owner’s income. Contributions are entered in annual (not monthly or weekly) amounts.

Note: If you set contributions as a percentage of income, once the owner’s earnings (employment income) end, the contributions will end as well. This rule does not apply to fixed contributions.

Note: Pension contributions and investments into bonds (onshore and offshore life funds) and discount gift trusts (DGTs) work differently than regular investments and savings. 

4. Next, go to the Time panel located on the right side of the screen.  Selections on this panel will be used to set the time span over which the contributions are to be made to the account.

5. Select the Event tab.

- Select a start event - an event to schedule the beginning of these contributions. A green dot will appear next to this event indicating that contributions will begin at this point in the timeline. If contributions are to begin as of the start of the plan (e.g. your client is already making regular contributions), simply select the Start event.

- Select an end event - an event to indicate when these contributions will end. A red dot will appear next to his retirement event, indicating that contributions will end at this point in the timeline. If contributions are to occur until the very end of the plan, select the final Mortality event as the end event. 

Tip: If you don't already have events on the timeline that are positioned appropriately to be used as start or end events, new ones can be easily added by clicking the New Event button, located in the bottom-right corner or the Time panel > Event tab.

Future contributions will only be made if funds remain available after expenses are met. Also note that if you were setting contributions to an ISA, the software enforces annual ISA contribution limits per individual within a plan.

Future contributions will be reflected in the position of the black need line on the Let’s See cash flow chart.

Check the charts for these future contributions.

To view these contributions, click Let's See.

Select any bar of the chart during the contribution period. The chart legend will display.

Click Detailed Info. The chart details panel will display.

Select the Investments the tab.

Planned contributions will be shown in the Contributions Scheduled column, which will show both the amount of the planned contribution and the amount of the actual deposit. The actual deposit may be lower than the planned contribution if the funds are unavailable to make the full deposit or in the case of ISAs, if the planned contribution exceeds allowable contribution limits.


Further Reading

Is surplus income assumed spent or saved?