Your profile
• Your age and desired retirement date
• Your desired income in retirement
• The current size of your pension pot
• The necessary pension pot at retirement
• Your monthly contribution ability
• Preference between annuity purchase and income drawdown
Objectives
1. Risk Tolerance
• Ability Determined by your existing levels of wealth and your stage of life. Risk-taking ability is positively related to the size of your net worth, and inversely related to your age.
• Willingness Determined by your emotional comfort levels with risk taking. Advisors should respect willingness ahead of ability.
2. Return requirement
• Determined by the current size of your pension pot and your ultimate target
• It is essential to consider inflation and take a total return approach here
Constraints
• Time horizons: the stages of your path to retirement. This could include periods of paying education costs, other major expenses, semi-retirement and so on.
• Liquidity requirements. Includes any current spending requirements that will affect your contributions, any large significant expenditures in the future.
• Taxation. Your current tax bracket and your expected bracket in retirement.
Unique circumstances
• Restrictions on holding certain investments on the grounds of personal beliefs.
• Likely developments that could affect your savings and wealth levels.
Assets outside of SIPP
• Your SIPP plan should take full account of your entire personal wealth.
• Other significant assets and liabilities outside of the SIPP should be considered. These might include ISAs, other pensions, your primary and secondary residences, assets held in trust.
• Next scheduled IPS review date.
