Bespoke service to fund the purchase of a new guest house

Andrew approached us looking for some advice in relation to buying a Guest House in Tenby for him and his long term partner Cheryl to run. Andrew had no funds available to acquire the business and had very little equity in the home.  

He had been to the Bank who told him there was little hope; he approached us as a last resort. 

We looked at his work history and discovered that from 1990 until 2003 he had been party to his employer’s final salary scheme. Further investigation of the scheme revealed it to be worth over £513,000. 

Given that gilt yields were low at the time, this had produced an artificially high transfer value and would potentially have provided sufficient funds to acquire the business and to pay all associated costs. 

We then calculated that he would need an investment return of 10.41% per annum to give him identical benefits to what he would lose if he moved away from the final salary. Under normal circumstances we would not recommend this, however, taking into account the business plan and the increased revenue available through running the business Mr Morris was happy to agree to the transfer as it offered him the ability to achieve the dream he and his partner had wished for which he never thought was possible.  

Under pension rules he used all of this money to purchase the guest house. As he was unmarried it ensured that in the event of death the £513,000 would pass to his partner as opposed to the £81,400 she would have received from the old scheme. Not only that but this £513,000 would stay within the family and pass on in the years to come.