The information contained in this article was correct at the time of writing
September 29, 2023
Pensions and Wealth Management: A General Overview
Overview of pensions landscape in UK
– Key statistics on retirement savings rates, life expectancies, etc.
Explanation of different types of pensions
– State pension
– Workplace/employer pensions
– Personal/private pensions
– Differences, pros and cons of each
Overview of pension allowance rules
– Contribution limits
– Tax relief incentives
Outline of key players in pensions industry
– Leading providers
– Investment/fund managers
– Advisors/consultants
Overview of wealth management landscape
– Define wealth management
– Statistics on HNWIs and mass affluent individuals
Outline of key wealth management services
– Financial planning
– Investment management
– Tax/estate planning
– Philanthropy
Benefits of comprehensive wealth management
– Coordinated strategy
– Access to opportunities
– Wealth preservation
The pension landscape in the UK has undergone major changes in recent years. Life expectancies have increased steadily, meaning retirement can last 30 years or more. This puts pressure on pension pots to provide long-term financial security. At the same time, demographic shifts have led to declines in traditional defined benefit pensions. In their place are defined contribution pensions, which place more risk and responsibility on the individual.
According to the Office for National Statistics, the average life expectancy at age 65 years in the UK is 18.6 years for men and 21.0 years for women. Yet research shows over half of adults have little or no retirement savings. The Money Advice Service reports the median retirement pot for 65-year-olds in the UK was just £58,029 in 2022. With state pensions providing minimal income replacement, this leaves many vulnerable to poverty in old age.
Making the most of pensions allowances is key to building an adequate retirement fund. All eligible UK adults have an Annual Allowance for tax-free pension contributions of £40,000 per year. Those with income over £240,000 have more limited allowances. Unused allowance can be carried forward up to 3 years to make catch-up contributions if means allow. Tax relief on contributions provides an effective boost.
There is also a Lifetime Allowance on total pension savings before penalties apply. This sits at £1,073,100 currently but has reduced over time. Special rules apply for those with significant final salary pensions. Careful planning around allowances can prevent costly tax charges eroding retirement funds.
The UK pensions industry manages over £2.6 trillion in retirement assets according to TheCityUK. Key providers include firms like Aviva, Legal & General, and Royal London supporting workplace and individual pensions. Top investment managers like BlackRock, Vanguard, Fidelity International and Schroders manage pension fund investments under advisers’ direction.
Wealth management is a holistic approach to investing and managing the financial affairs of affluent clients. The UK private wealth market serves over 5 million individuals according to Ledbury Research. This covers mass affluent investors with £100,000 to £500,000 in investable assets, all the way up to ultra high net worth individuals (UHNWIs) with over £30 million.
Comprehensive wealth management coordinates all aspects of finances to optimise growth, minimise taxation, preserve wealth over generations, and achieve personal goals. This may include:
– Tailored investment strategies accessing opportunities like private equity
– Tax planning and mitigation arrangements
– Inheritance and succession planning
– Philanthropic structures like charitable trusts
– Concierge luxury asset and lifestyle services
Taking a consolidated view allows maximising the utility of a client’s capital. It enables passing wealth efficiently to chosen beneficiaries rather than losing 40-50% to taxes. It also means supporting personal values through considered charitable giving structures.
The complexities of wealth management demand specialist expertise. The UK industry has over £1 trillion assets under management. Leading firms include private banks like Coutts, C Hoare & Co and Weatherbys. Also multi-family offices such as Stanhope Capital, Sandaire Investment Office and Vestra Wealth.
Every investor’s situation is unique. Their pension and investment needs require customised strategies to deliver security and meet their financial goals. Our wealth management specialists have decades of experience tailoring financial plans and portfolios to client’s individual circumstances and priorities. Get in touch today to arrange an initial discussion about how we can help you.
