PENSIONS 2013 Institute of Financial Accountants 19 June 2013

Pensions and wealth management group AIM listed – market cap circa £46 million Established 1991 – over 20-year proven and stable track record Assets under advice and administration - £3.5 billion 270 staff; 54 consultants (offices in Leicester, London, Aberdeen and Glasgow) 6,000 small self-administered scheme (SSAS) and self-invested personal pensions (SIPP) clients Strong client retention - 98% “Through personal and proactive delivery of trusted advice, building long-term client relationships remains our core objective.”

Changing rules 2014 Pensions & business Auto-enrolment Agenda

Annual contribution allowance — £50,000 per year now —£40,000 per year 2014/15 tax year —£50,000 carry forward until 2013/14 used Some already in new rules! — Personal pensions – change 5 April 2014 —Company scheme Pension Input Period? —E.g. 30 April = already £40,000 Changing pension rules

Lifetime Allowance Maximum tax efficient value of pension Over LTA = no tax free cash/excess tax = 55% Was £1.8 million, now £1.5 million 2014 = £1.25 million Affected? Big pensions or long time to retirement Doctors/dentist promotions in public sector schemes £54,000 pension in NHS scheme = £1.25 million Changing pension rules

New protection(s) Fixed protection 2014 — Keep £1.5 million (cost = no more contributions) Personalised protection — Fund £1.25 million £1.5 million on 5 April 2014 —Keep fund value to £1.5 million —Can contribute Review clients – maybe apply for both? Changing pension rules

Pensions & business

Amalgamate pensions – new scheme New contributions (Corporation Tax Relief) Lend money back? SIPPs & shares in company Connected transactions Uses of SSAS & SIPP

Loanbacks 50% of fund value Minimum rate of 1.5% 20% repaid per year – 5 years Contribution in = loan out Security Creative solutions (not lender of last resort) & re-scheduling Only SSAS! Small self-administered schemes (SSAS)

Company owns property – has trading risk to property Sell to pension fund (SSAS & SIPP can borrow 50% of fund value) Lease back to business Rent = commercial lease (deduction from taxable profits) Property now owned by pension = secure SSAS & SIPP - Property

SIPP can use fund to acquire shares in connected company 50% of fund value is target maximum  Risk  Exit  Pension not trading May go higher – case by case Effect = release capital to company & known investment risk to pension Tax issues? – taxable property Safest = service companies SIPPs & company shares

SSAS & SIPP can transact  with family/member  with company No loans to members/connected family Members/ companies can lend to schemes Problem = need cash but below age 55? SIPP/SSAS solution = buy shares/land/property off client Market values Keep death benefit, 100% lump sum Connected transactions

Auto-enrolment

49% of UK population saving for retirement 50% who have a company pension scheme don’t join What about State Pensions: Ratio of workers to pensioners 1901 – 10: – 5: – 2:1 That’s why! Why now?

Know their staging date Decide on the pension arrangement to be used Assess their workforce Communicate Auto-enrol eligible jobholders and keep records Pay minimum contributions Post auto-enrolment (employer duties) Compliance (The Pension Regulator) What do employers have to do?

Who get auto-enrolled?

Contributions?

Salary, Wages, Overtime, Bonuses, Commissions Statutory Sick Pay Statutory Maternity Pay, ordinary or additional Statutory Paternity Pay Statutory Adoption Pay Qualifying Earnings Include Qualifying earnings are between: £5,668 - £41,450 Different definitions of earnings: Qualifying earnings Tier1 – Basic x 9% Tier2 – Total x 85% x 8% Tier3 – Total x 7%

Things we hear? Employer AttitudesThe Reality We are OK, as we pay enough into our scheme Every scheme needs to be looked at for various reasons We will wait until the last minute as there is no rush? The process takes a lot longer than most expect We can produce the correct data no problem Many have not! NEST will do everything for us!NEST will not provide advice We will just auto enrol everyone so we don’t need to worry All workers need to be classified and communicated as required by tPR We will just use the postponement option to delay You can, for the contribution but not the communication! Everyone will opt out anyway so it wont end up costing us anything Current opt out rates are low, and the costs increase for employers

The Kudos process? Kudos auto-enrolment support services outline Initial client engagement Stage 1 Report – Staging dates Detailed scheme review and initial cost analysis Stage 2 Report – Current analysis & cash flow options Consultancy Decisions Qualifying scheme(s) options Postponement (all employees or part) Definition of pensionable salary Method (qualifying earnings or self certify) Recommendation Build, test & Implementation Communication solutions (generic or bespoke advice) Software administration solution:, pension provider or in-house

Solving the problem Stage 1 report – Staging dates = free Help you solve clients questions Stage 2 report – Scheme review & budgeting 1.Kudos report direct 2.White label with you Minimum 10 reports + £250 minimum per report (disbursements on top). Add in your own time!

Any questions?

Disclaimer The views provided in this presentation are for general information purposes only and represent the opinion of the authors based on market conditions at the time of writing, which are subject to fluctuations, and interpretation of current and proposed legislation and HMRC practice, which are subject to change. Nothing in this document represents investment advice of any nature whatsoever, and it does not constitute an offer or solicitation to purchase or sell any financial instruments. Accordingly, to the extent permitted by applicable law, Mattioli Woods plc and Kudos Independent Financial Services Limited do not accept any liability or responsibility for the information contained in this presentation or any investment decision or other action that may be taken in reliance upon the information contained in this presentation. Mattioli Woods plc and Kudos Independent Financial Services Limited accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to their assumptions. Mattioli Woods plc. Registered in England No MW House, 1 Penman Way, Grove Park, Enderby, Leicester, LE19 1SY. Mattioli Woods plc is authorised and regulated by the Financial Conduct Authority.