Flexible Investment and Retirement Solutions

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• Introducing Flexible Investment and Retirement Solutions
• Benefits of the service
• How the service works
• Supporting the advice process – pre-sale illustrations
• Crystallising Pension Savings Accounts
• Best practice when creating new accounts

Clients will invariably have a range of needs or goals. Retirees, for instance, may well require an immediate income from their pension fund but may also need some of their savings to cover potential expenditure in the future, such as health and care costs. Separately, if the client wishes to pass on some of their wealth to loved ones, then the pension may need to fund this too. As such, it may be appropriate for the pension assets to be divided into different accounts – each with different investment approaches.

This is now possible through our new Flexible Investment and Retirement Solutions facility. It provides a simple and straightforward way to manage multiple strategies within a single pension. This option allows you to efficiently create and maintain any number of separate accounts for a client – for both Pension Savings and Pension Drawdown Accounts – helping you to plan outcomes tailored to their differing needs and goals. This functionality is also available for ISAs and Investment Accounts.

Flexible Investment and Retirement Solutions can provide you with the flexibility needed to support your Central Retirement Proposition, allow you to manage short term income needs and sequencing risk and incorporate different investment solutions in line with the FCA’s thematic review.

• Clients can hold segments of their pension in different accounts according to their needs and goals
• Different investment approaches can be used in each account, including your own model portfolios, models from one of more DFM or individually selected investments
• Allows assets that cannot be held within models, such as the Standard Life Smoothed Return Pension Fund
• Allows assets to be held separately from model portfolios for specific purposes, such as income. For example cash and the Standard Life Guaranteed Lifetime Income plan
• Regular savings can be funnelled into one or numerous accounts
• Separate settings can be applied to each account, such as the rates for adviser and DFM fees
• Assets within each account can be transferred to other pots as client needs change over time
• To support the advice process, standalone pension pre-sale illustrations can be produced for each client
• The Flexible Investment and Retirement Solutions facility is also available for ISA and Investment Accounts

The diagram below illustrates how the facility may be used for a client in drawdown. In this example, four separate accounts have been created – one to generate pension income, another to hedge against market volatility, with two further pots to account for medium and long-term needs – with each account adopting a different investment strategy.

New accounts are created by a simple online stock transfer process within the client’s account (this option can be selected from the Account Summary screen). You can move some or all of the available assets to your chosen account*. Once an account has been created and the assets moved across, you can then execute trades, set up model portfolios, and rebalance the account and confirm other settings (such as adviser or DFM fee rates).

* Please note the Standard Life Smoothed Return Pension Fund cannot be transferred to a new account due to restrictions on the number of sell trades in any 90-day period.

More information on how to create accounts is available within the Help & Support area of our website.

To fully support the advice process and the need to provide a pre-sales illustration, we have introduced a new standalone pre-sales illustration tool. This tool allows you to illustrate the end state you are recommending to a client, and can include multiple savings and drawdown accounts, with their own specific details for charges, income, RSPs etc.

More information on how to create illustrations is available within the Help & Support area of our website.

The diagram below illustrates how crystallising a Pension Savings Account could work when moving a client’s assets into drawdown. The act of crystallisation creates the first Pension Drawdown Account and, in this example, stock transfers are then implemented to create new accounts designed to meet the client’s medium and long-term goals. The original account created following crystallisation is used to meet the client’s immediate and ongoing income needs. Subsequent stock transfers can be implemented over time as the client's needs change.

More information on how to create illustrations is available within the Help & Support area of our website.

On creation of a new account, you may wish to bear the following points in mind to ensure each account is set up correctly:

• Once a new account has been established, you will need to set the investment strategy. This may involve the switching or selling of the assets that have been transferred and the selection of new investments or assigning of a model portfolio. Where a model is applied to a new account, a rebalance may be required.
• The natural income settings for a new account may need to be adjusted. By default, any natural income from investments will be set to be reinvested when you use the Stock Transfer process to create a new account.
• The Adviser Ongoing fee rate is carried over from the original account to the new account – you may need to adjust this depending on what you have agreed with your client. An ongoing DFM fee may also need to be set up (this rate is not carried over to the new account). 
• For Pension Savings Accounts, a regular saving plan can be created for the new account. If you need to run multiple regular savings plans from the same payer type, i.e. personal, employer or a third-party, you can do this by creating a second account and running them separately. Likewise, if you need to run regular savings plans where the employee and employer contributions are from the same source bank account, this can be done by creating a second account and running the plans separately (one as an employer plan and one as an employee plan).
• For Pension Drawdown Accounts, a pension taxable income plan can be created on an account in a pension arrangement. Please review the cash and investment settings to ensure there are enough investments to make sure the ongoing pension income can be paid (if applicable).
• When crystallising assets, you should avoid creating new accounts for the purposes of applying multiple investment strategies, as this will create a  new pension arrangement which cannot be merged with existing drawdown pension  arrangements.
• When transferring to immediate drawdown, it may be advisable to crystallise into an existing Pension Drawdown Account where one exists for maximum future flexibility.
• If a client holds a Standard Life Guaranteed Lifetime Income plan, each tranche remains in the account from which they are purchased. For any subsequent purchases, it may be best to buy this new tranche within the same account that holds the original tranche.
• Adviser fee rates are set at an account level, allowing you to take different fees on each account, as long as these are within the rules for permitted fees.
• If Standard Life Smoothed Return Pension Fund assets are to be moved to a different account, you will first need to sell them to cash, which can then be moved once settled (please note there is a 10-day delay for this fund on selling to cash).

More information on how to create accounts is available within the Help & Support area of our website.