Step-by-Step - How to enter a money purchase pension **AdviserGo, UK**

1. Click on the + sign in the bottom right then select Pensions --> Money Purchase

mceclip0.png

 

2. Owner: Start by selecting the owner of the pension from the drop down.

3. Type: Select the category that best describes the money purchase.

- The type is used largely for informational purposes only. The type of money purchase does not appear in reports or on the Let's See charts or general Overviews. There is a difference, however, between personal pensions (PPP/GPP/SIPP) and occupational schemes (COMP/CIMP schemes, grouped together under the moniker 'Occupational Pension', and Small Self-Administered Schemes), in terms of how tax relief is granted. Read more >>

4. Account Name: Enter a name for the pension. The name you enter must be unique within the plan.  

5. Account Balance £: Enter the current balance of the pension at the beginning of the plan.

- If this is a hypothetical new pension, one that will be funded in the future through regular contributions or transfers, enter a starting balance of £0. The pension is therefore an empty account awaiting future funding.

6. Contribution £: If your client plans to make contributions to the pension, enter these either as a total annual amount, an annual amount with inflation, the maximum allowed contribution or as a percentage of salary. For example, an entry of 8% would mean that the client plans to contribute eight per cent of his future salary to this pension.

- This annual contribution amount should always be a gross figure, which the software will net down annually by 20% when applying tax relief. Contributions will also provide income relief as the software calculates annual taxes. Read more >>

- The software will check for earnings and enforces the current annual contribution allowance on money purchases. Read more >>

7. Employer Contribution: Select Yes if your client’s employer or company also makes contributions to his pension. These are contributions that are not deducted from the client’s annual income.

8. Specify whether these employer contributions are Matching those made by your client or are Fixed, meaning that they are made independently of any contributions made by your client.

 

If contributions are Matching:

Matching Contribution:Specify the percentage of the employee’s contribution that the employer is willing to match. For example, enter 100% to indicate that one hundred per cent of John's contributions are matched by his company.

Matching income: As a percentage of income, what is the maximum amount the employer is willing to match. For example, enter 10% to indicate that your client’s company would match up to a maximum of 10% his salary.

 

If contributions are Fixed:

Enter the employer’s contributions either as a total annual amount, an amount with inflation or as a percentage of your client’s salary. For example, an entry of 10% would mean that the employer plans to contribute ten per cent of your client’s future salary to this pension.

- Again, special settings are also available for linking percentage-based contributions to a specific income source. This may only be necessary in cases where a client has multiple income sources. In such a case you might link a money purchase to a specific income in order to indicate percentage of which salary. Read more >>

 

Timing contributions

In most cases you may leave the events on the Timeline unselected. Timeline selections for money purchases are used to set the timespan over which contributions will be made to the pension. The software will assume contributions begin and end with the owner’s employment income, unless set otherwise on the Timeline.

With this said, alternative start and end events could be selected to indicate that contributions to the pension are to begin later or end earlier than the start and end of your client’s employment.

Also, if your client does not have employment related earnings, entered on the Employment screen, you will be required to set the timing of any contributions if these contributions are to be made. Contributions without supportive earnings will be limited to a lower annual allowance. 

If you do need to set the timing of money purchase contributions.

Go to the Timing section located under the pension account.  Selections on this timeline will be used to set the time span over which the contributions are to be made to the account.

- Click on an event icon (or double click above the timeline to create one) - to schedule the beginning of these contributions. Then select Set as Start Event.

mceclip1.png

 

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 - this will default to the client's 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.

mceclip2.png

 

Job Done

And that completes all that is required to enter a money purchase in Voyant. You may now click the Save button to save the money purchase into the plan,. However, before finishing, a word about the further settings, should you need them. 

 

Further settings

Growth - Probably the most important of these advanced settings are the Growth and (if used) the Asset Allocation settings. You might consider reviewing these two panels to ensure that the pension’s assumptions for future growth and account fees are set appropriately. Read more >>

Steps – Use events or in some cases stages to schedule future increases or decreases (steps) in employee and employer contributions, growth rates, as well as future changes to asset allocations (and hence, derived growth rates) and the withdrawal limit Read more >>

Transfers  – Set future transfers of funds into a money purchase from other accounts or in years where there are large lump sum inflows, from surplus income. Don’t confuse transfers with regular contributions, which are set using the contribution fields. This feature is also not intended to be used for crystallisations – i.e. transfers into drawdown pensions. Read more >>

 

Save Your Work!

Click the Save button to save the money purchase into the plan.

Your client’s money purchase now appears in the Dashboard, under Pensions. To view or edit the pension, just click on the entry in the Dashboard.

The software has automatically created a future drawdown pension -- with the name of the pension prefaced by Drawdown -- to receive funds from the money purchase when it will be crystallised, by default, at the owner’s retirement.

Additional settings are available for the future drawdown on this screen including drawdown income options and settings to schedule the future annuitisation of the drawdown, if desired.

Read more >> about the default crystallisation and draw down settings and how they can be set differently for phased drawdowns, deferred drawdown income, or annuitisation.