The Retirement Journey – “Powered by Iport ” Presented by : Philip Howlin
Objective “To encourage you to use one of the easiest and best tools in the market to help you grow your business” 2
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Agenda • Section 1: The Retirement Journey • Section 2: The Retirement Journey Powered by 5
How are you planning on spending your retirement? • Maintain same standard of living • More time with family and friends • Pursue leisure activities • Travel • Pass on funds to family • And more… 6 6
Are there any barriers to you in Retirement? How are you going to pay for that lifestyle once you stop working? 7 7
A lot of noise! 8 8
How will you fund your income in retirement? 9 9
5 simple steps to help you on your Journey Step 1: Estimate Retirement Expenses • Start with how much you spend • What expenses will you have to pay in retirement e.g. health insurance • What extra expenses do you want to budget for in retirement e.g. world travel • Do you have expenses that will decrease in retirement e.g. Mortgage • Most people underestimate what they will spend !! 10 10
Step 2: Estimate tax paid on Retirement Income 11 11
Target Tax Free Income at Retirement Income exemption limits: Age 65 or over Single Married 12
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Step 3: Use the 4 Pillars of Retirement Investment Keep Working State Pension Current Pensions funds & Properties 14 14
Pillar 1: State Pension € 12,000 per individual* € 24,000 per couple * State Pension is € 12,956 per year per individual and € 25,912 per couple. This figure has been rounded down to 15 € 12,000 and € 24,000 for illustration purposes. 15
Pillar 2: Current Pension Generous tax relief on your Pre retirement Tax free growth pension contributions Possibility of tax free regular Tax free lump sum income in retirement Post retirement 16 16
Pillar 3: Investment Income • Portfolio holdings: Can be used to generate annual income or to drawdown in conjunction with your pension. • Investment Properties: Sale of property & rental income. 17 17
Pillar 4: Work • Continue to work • Part-Time • Seasonal • Consultancy 18 18
Step 4: Build your pension fund Build a fund of € 400,000 19 19
Retirement Fund € 400,000 1.5 times Salary Tax Free Cash € 100,000 25% of Fund -20 years service € 100,000 -Salary of € 66,666 Annuity Income AMRF & ARF € 300,000 € 300,000 (4% Annuity) (4% drawdown p.a.) € 12,000 p.a. € 12,000 p.a. 20 20
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Cost per couple to reach this target To achieve € 36,000 income and € 100,000 lump sum Age 30 Age 40 Age 50 € 156 net € 214 € 468 a month each a month each a month each Premiums include tax relief of 40%. Based on taking tax free lump sum, retiring at 65 . 6% growth rate assumed. Mgmt fee 1.25%. 100% allocation. 22 22
Step 5: Get the right Investment Advice 23 23
Iport: Investment & Savings • Andy Ivory Corr’s three golden rules, clarify: 1. Objective 2. Attitude to Risk 3. Time Frame 24
New Irelands Fund Breakdown by Esma Ratings Esma 3 Esma 4 Esma 5 & 6 25
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Section 2: Retirement Journey Powered by Iport 27
Overview of a Client Financial Plan (earnings timeframe) (outlay timeframe) 28
5 Building Blocks to Iport 29
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1. Risk Questionnaire 31
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2. Attitude to Risk • Compliance – Most comprehensive in the market • Builds in the term of the investment / pension / ARF • ATR can be emailed to the client (save 15 minutes in a meeting) 35
3. Fund projections – Stochastic Modelling • Compliance – the UK you have to show a form of this illustration • Opportunity to manage expectations • Guaranteed to lose the client money at some stage, have the conversation early, build better relationship • Helps the client focus on the journey and not the short term performance • Realistic growth rates using Ifunds Risk Assumed Expected Standard Asset Mix Return Deviation 3 iFunds 3 3.5% 6.0% 4 iFunds 4 4.6% 8.6% 5 iFunds 5 5.7% 12.2% 6 iFunds 6.3% 15.5% Equities 36
Pre Retirement Journey Client 37
Retirement Fund € 400,000 1.5 times Salary Tax Free Cash € 100,000 25% of Fund -20 years service € 100,000 -Salary of € 66,666 Annuity Income AMRF & ARF € 300,000 € 300,000 (4% Annuity) (4% drawdown p.a.) € 12,000 p.a. € 12,000 p.a. 38 38
Post Retirement Client 39
In an ideal world ….what do retirees need? Adequacy 40 40
What do we have? Annuities Poor value at Guaranteed income Simple design today’s prices for life 41 41
What do we have? AMRF & ARF Need to set “realistic” Longevity Investment and level of income “Bomb out” risk volatility risk 42 42
So where does that leave us? • Customers tend to value adequacy over sustainability • Retirees focussed on income generation and most view current annuity rates as bad value for money • Annuity purchase tends to come from OPS – Highest lump sum via salary and service • Where there is choice trends show majority of people will go for the ARF/AMRF 43
How are retirement benefits being taken? By fund value By claim count 44
Post Retirement Client • Specific Post retirement questionnaire - not a one size fits all • Post Retirement ATR with term built in • A tool for managing your clients retirement income • Builds in life expectancy • Ability to compare and contrast ARF vs Annuity • Flexibility to illustrate and calculate bomb out risk on different income drawdowns 45
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Example – Imputed Distribution 49 49
Conversation opportunity? Risk category 3 Risk category 5 50 50
How can New Ireland help you on the journey? 51
1. Bring your client on a Journey with Iport 52
2. Professional Reports: New & Existing customers 53 53
3. Unique Death benefit 54
4. Sentinel Fund – Behavioural Management 55
Sample ARF Investment Proposal • 4% deemed distribution requirement • 5 years of withdrawals: 20% invested in a low risk fund Sentinel • Prime/iFunds 80% invested in growth assets • Client requests withdrawals from low risk fund only Deemed distribution 56 56
5. Reduce Sequencing Risk with Risk Managed Funds 3.6% Good sequence rolling 5 yrs: 18%, 12%, 8%, -5%, -15% p.a. Bad Sequence rolling 5 yrs: -15%, -5%, 8%, 12%, 18% 57 57
Summary of Iport: Pre & Post Retirement • Most compliant end - to - end system in the market • Easiest to navigate • Most time efficient to build professional reports with your Company Log. • Flexibility to use for all clients and include external companies • Projections allow the Adviser to bring the client on a journey • Most clients don’t get to see what they will receive at retirement age • Usually backward looking and only focused on performance • Risk rates overall assets • Ability to build customised portfolios • Helps bring your client on a journey and be less product or performance focused. • Iport is a complimentary tool to our brokers (no cost at present) 58
Compliance Notice Important Note Past performance may not be a reliable guide to future performance and the value of investments may fall as well as rise. Terms and conditions apply. While great care has been taken in its preparation, this presentation is of a general nature and should not be relied on in relation to a specific issue without taking appropriate financial, insurance, investment or other professional advice. The content of this presentation is for information purposes only and does not constitute an offer or recommendation to buy or sell any investment, or to subscribe to any investment management or advisory service. New Ireland Assurance Company plc is regulated by the Central Bank of Ireland and is a member of the Bank of Ireland Group. State Street Global Advisors Ireland Limited is regulated by the Central Bank of Ireland under the Investment Intermediaries Act, 1995. 59 59
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