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Real time case study - Miss J

Portrait of Miss J on Burnham Beach on a blustery day

Miss J was a divorced single mother aged 42, with 4 young children and, back in 2003, although she had a big, demanding job, she had little historic pension provision.

Miss J was introduced to Jenni Turco through social and farming circles and a casual conversation about not knowing how she was going to cope in the future led to a long lasting and very positive professional relationship.

They arranged to meet and Jenni spent time understanding Miss J’s financial position, her work/life ambitions and the assets and liabilities that Miss J had accumulated over the years. Following ‘pension simplification’ in 2006, Self Invested Pension Plan (SIPP) opportunities increased although the detailed arrangements and opportunities they provide are still a mystery to most. It was this that Jenni thought might provide a way forward for Miss J. So together with Alex Turco, the three of them started considering a SIPP, based on the redundant farm that Miss J held, surrounding her home in Wiltshire. The farm had been a successful pig production business, but was wiped out by Foot and Mouth in 2001 leaving the farm worth very little and it feeling like a burden.

A number of discussions later, with extensive background research, particularly by Alex Turco, a plan started coming together. Miss J understood the costs necessary to support her family for the next 15 years, but at the same time needed to protect herself into the future once her family had grown up. She embarked upon a fascinating financial journey with Positive Wealth Creation leadership and support; and a SIPP to turn around her financial situation. 

The extensive range of existing buildings was not worth very much (and would not have provided an annual income had they been sold). So the first part of the plan was to increase their value.

Some of the properties, old barns and sheds were converted into small industrial or commercial units, and these were transferred by purchase or in specie contribution into the newly formed SIPP.  The rents from the properties went into the tax efficient SIPP for the future, avoiding substantial income tax charges while Miss J remained a higher rate tax payer on her earned income. Spare cash which accumulated from rental income in the SIPP was used to invest in a shop property in a rural town centre.

The SIPP now owns a range of commercial property and cash accumulates from the rents.  As an enduring investment it performs outstandingly well, and is largely self-managed.

Separately some of the buildings and some of the land were used for the supply and erection of a significant solar PV facility, using a different government scheme and a feed in tariff. Although this needed funding, the purchase price would be paid back in four years, providing further diversified income for 20 years.

When she was aged 54, Miss J’s youngest child won an apprenticeship and left home to live in Derby to pursue his career as an aeronautical engineer, the last one to fly the nest. As a quirk of fate simultaneously she was given the opportunity to go and live on a remote Caribbean Island for two years, which entailed leaving her long held and lucrative employment. The large farmhouse was let on a long term basis to help fund this move, and as the two years concludes, she recognised that her new found international lifestyle was fascinating, and provided employment opportunities of which she had been completely unaware. The short to medium term plan is to pursue international work and the need for a large farmhouse has receded. To accommodate this, further changes to the SIPP have taken place and were encouraged particularly by the more advantageous death benefit taxation regime for pensions, introduced in 2015.

One more recent step along this journey has been to transfer some more land into the Pension and exchange it with a commercial building which had been in the SIPP for some years. This released a small property that benefitted from permitted development rights which she will turn into a new home as domestic properties are excluded from SIPPs. Advice and guidance by Positive Wealth Creation has enabled full advantage to be taken of the flexibility of SIPP’s. Changes have been made over the last fifteen years to suit Miss J’s lifestyle changes and she is now in a position to retire at any point and draw down her pension when it is needed.  The pension has been designed to be flexible, and has demonstrated its adaptability to changing lifestyle choices exercised by Miss J.

Jenni Turco’s continued supervision of the Plan has been key to ensuring it keeps ahead of the game. She worked closely with Miss J, and used her professional guidance and psychological methods, especially in collecting case historical data, and used various personal interview techniques and included testing interests and aptitudes. Alex Turco’s in depth knowledge of the tax regime and possible future trends has ensured that Miss J’s financial situation has turned around and she is now looking forward to the future from a firm financial footing, based on the same buildings that not so long ago were a liability.

In short, from having almost no pension provision in 2002, and buildings which had been rendered redundant by the rural catastrophe which was the 2001 Foot and Mouth Disease outbreak, Miss J looks forward to a healthy income from her pension, still living on the farm from which the pension is provided, regularly topped up by rental income from the private and Pension properties.

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