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SUMMIT

Summit Life insurance & Pensions in Dublin

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Business Owners / Directors

Here at Summit Life & Pensions we have many business owners as clients. We work with them closely to provide appropriate advice and ideas on how best to structure certain benefits through their businesses. Read more

BELOW WE HAVE PROVIDED AN EXAMPLE OF THE TYPE OF ADVICE AND SOLUTIONS THAT WE HAVE GIVEN TO BUSINESS CLIENTS IN THE PAST TO TRY GIVE YOU A TASTE OF THE SERVICE WHICH WE PROVIDE.

Summit L&P begins the planning process by, firstly, carrying out a detailed fact-finding exercise with client. This is always the starting point of every initial meeting with new clients. This allows us to build a proper picture of a client’s current financial position and also to drill down and find out exactly what are the client’s needs and objectives.

JOHN AND MARYClick to expand

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OUTLINED BELOW IS A CASE STUDY WHICH PROVIDES AN EXAMPLE OF SOLUTIONS WE HAVE WORKED ON IN THE PAST:

John and Mary are a married couple and own a successful business together.  John is 50 and Mary is 48 years of age.  They have two children aged 13 and 10 years of age.  John and Mary have a number of existing pension and life cover policies in place which need to be reviewed and taken into account.

They had three main requirements which I have outlined below:
  • They both wanted to retire from the business by the time Mary reached age 60 with at least 50% of their current salaries (€100,000 per annum) as an income which was to be funded from their pensions
  • They wanted to make sure that they had adequate cover on a personal & business basis to protect their family and business in the event something was to happen to either of them medically
  • They wanted the business to pay for the above requirements where possible


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HOW SUMMIT LIFE & PENSIONS HELPEDClick to expand

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THE FIRST STEP WAS TO GATHER ALL THE INFORMATION ON THEIR EXISTING POLICIES.

This was easily done simply by getting John and Mary to sign a letter of authority which allowed Summit L&P to request policy information directly from the life companies. We were able to ascertain very quickly which of these existing policies were worth keeping and which needed to be reviewed and replaced.

After analysing what John and Mary were looking to achieve and taking into account the existing policies they had in place, we were able to advise them of the following:

  • They wanted to retire within the next 12 years (Mary aged 60) with an income of €50,000 per annum each. Currently they had a combined pension fund of €800,000 from existing pension policies that they had paid into over the years. We calculated that they would need a pension fund of approx. €2.4m between them (€1.2m each) to fund their pension need. Therefore, they had a shortfall of €1,600,00
  • We calculated that they would need to contribute a monthly premium of €7,500 between them to build up the €2.4m pot of money required. Luckily the business was in a position to contribute this monthly requirement and we advised them to set up an executive pension plan with a suitable fund strategy (see investment strategy process). Our projections (€2.4m) assumed a growth rate of 6% per annum which is a reasonable rate of return over a 10 year plus investment term
The second part of their requirements was to ensure that they had adequate personal & business protection in place. Again they had a number of existing policies which we reviewed and took into consideration when providing our recommendations. We suggested the following:
  • As they had no income protection cover in place to protect the business in the event that either of them were unable to work due to illness or accident, we recommended putting in place income protection plans for both of them up to the maximum allowable (75% of salary). The company was able to pay the premiums and also receive tax relief at 12.5% on the premiums.
  • We also recommended putting in place two pension term assurance (life cover) policies of €400,000 (4 x salary) on each of their lives which would provide some cover in the event of either of their untimely deaths. Again, the company could pay the premiums and would receive tax relief at 12.5% on the premiums.
  • They had existing life & serious illness policies in place which we were able to re-price and get a better premium than what they were currently paying. This type of cover had to be paid personally and is not able to receive any tax relief on the premiums.

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SUMMARYClick to expand

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This is only a very quick snapshot of the type of advice and services which we provide to clients, whom have many different needs and requirements. By completing our tried and tested process of fact finding and listening to clients we are able to really help our clients achieve realistic targets and set achievable goals.

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Dormant Pension Policies

Summit Life & Pensions deals with many clients who have existing pension policies from previous employment either from their time when working with a previous employer that provided a pension plan for them or possibly when they were self-employed and had been paying into a pension plan personally. Read more

We are able to review these existing pension policies for clients and provide appropriate advice and ideas on how best to manage them going forward.

Below we have provided an example of the type of advice and solutions that we have given to a client in the past who had a two paid up pension plans from previous employment to try give you a taste of the services which we provide to clients.

STEPHENClick to expand

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Stephen is 45 years old and is an employee of an engineering company. Stephen has two existing pension policies from previous employment which he has not paid into for a number of years. He does not have any up to date information on either of these polices except which life company they are with.

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HOW SUMMIT LIFE & PENSIONS HELPEDClick to expand

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Summit L&P began the planning process by, firstly, carrying out a detailed fact-finding exercise with Stephen. This is always the starting point of every initial meeting with new clients. This allows us to build a proper picture of a client’s current financial position and also to drill down and find out exactly what are the client’s needs and objectives.

We have detailed some of the specific pension findings from the fact finding exercise below:
  • Stephen was self-employed for a number of years and paid into a personal pension plan for approximately 4 years. He thinks the value of this personal pension plan is approximately €35,000 but does not know for certain or what it is invested in.
  • He also has a company pension policy from his time he worked in a company when he was in his twenties. Again he thinks that the value of this company policy is worth approximately €25,000 and he does not know what it is invested in.
After analysing the above information and organising for Stephen to sign a letter of authority which allowed us to get full policy information on the two pension policies, we came back with the following findings and recommendations:
  • The personal pension plan had a current and transfer value of €28,000. It was invested in a balanced managed fund (75% equities, 15% government bonds, 5% property and 5% cash). From the risk questionnaire that we completed with Stephen, we concluded that this fund was too volatile and high risk for Stephen’s risk profile (he came out as a low-medium risk investor from the answers he provided on the risk questionnaire).  The charges were high (1.5% per annum fund management fee) plus there was only a limited number of funds which the policy could invest in.
  • We recommended that the full amount of this policy should be transferred into a new personal pension plan with a different life company which offered a lower fund management fee (0.75% per annum) and more importantly, a much wider choice of funds from which to choose to invest in. We helped Stephen put in place a suitable fund strategy that matched his risk profile. There was no penalty/charge to Stephen to transfer this policy and he would also benefit from the lower charges.
  • The company pension policy had a current and transfer value of €38,000. Again it was invested in a managed fund (78% equities, 17% government bonds, 3% property and 2% cash) which did not match Stephen’s risk profile. The charges were average (1% per annum fund management fee) and again there was a limited number of funds available to invest in.
  • We recommended Stephen to transfer the full value (€38,000) out of this company pension policy and into a Personal Retirement Bond (PRB). This type of policy (PRB) would allow Stephen to have a full choice of funds to invest in with very competitive charges (0.75% per annum fund management fee). Again we helped Stephen put in place a suitable fund strategy that matched his risk profile. It allowed Stephen to take full control of the policy as it was no longer part of his old employer’s pension scheme. Also, by transferring the company pension policy into a PRB policy, it provided Stephen with good options and flexibility.

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SUMMARYClick to expand

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As you can see from the above there are times when it makes sense to review existing policies to ensure that (A) they are good value and that charges are not too high and (B) that they are still meeting the needs/objectives and very importantly, the risk profile of the client.

As mentioned already, it is vitally important and part of Summit L&P’s client agreement to review client’s policies and their individual financial position at least annually. Things change very quickly in life so it is therefore very important to review all of the above regularly.

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