Announcing DT’s Budget updates and risk profiling enhancements

During April and May, we are updating Dynamic Planner to take account of the changes following the Spring 2011 budget, the Pensions Bill and the recent guidance on risk profiling. This note summarises what is changing, when and why.

Budget: 23 March 2011

All tax bands, rates and benefit levels used in Dynamic Planner will be automatically updated as part of our Budget release overnight on 5th/6th April.

This will affect the planning modules, including Cashflow and Protection Needs Analysis (as a result of the changes to Incapacity Benefit).

A number of other changes were also announced in the Budget Speech. These included further significant restructuring of state pensions, adjustments to inheritance tax rules with new allowances amongst other rules. We will be thoroughly reviewing these changes and we will circulate an impact assessment in due course. This will include a plan outlining any further development that will be required.

A Budget summary pdf is available on our website.

Pension legislation changes

The Pensions Bill 2011 takes effect from 6th April and removes the compulsory requirement to take an annuity by age 75. As a result, the following will change as part of this year's Budget release:

• Removal of compulsory annuity - advisers can now select a new box 'not taking an annuity' and the option still remains to take one (max age 99)
• Flexible drawdown
  • Advisers will be able to select a percentage (in 1% increments) or a specific amount. A warning note will appear to ask for the adviser to confirm that the client meets the £20k 'minimum income in retirement' test.
  • Drawdown calculations have also been updated to fall in line with the review schedule (every three years to age 75 and annually thereafter)
• The annual and lifetime allowances will reflect the new limits. The 'Scheme joining date' is now part of the basic details and a new annual allowance screen will be introduced to capture any unused allowance for the previous three years. Dynamic Planner will then use the current contribution level, rate of increase and joining date to estimate the previous contributions. This can then be overridden with exact figures, and this will enable the contribution in any year to be edited.
• The option to contract out only applies to 2011/12 and we have amended the data captured for forecasting purposes

These changes will affect the following modules: At Retirement, Retirement Planning, Pensions Switching and Estate Planning.

Risk profiling enhancements

Our Spring release will be issued overnight on 12th/13th May and will include a number of enhancements to risk profiling:

• Updates to all 10 risk profile titles and descriptions
• Updates to our 10 and 20 question questionnaires
• Additional wording and screens to remove any ambiguity regarding ability to understand the questions and to highlight inconsistencies in the answers
• Introduction of additional support for managing the trade off between attitude to risk and capacity for risk
• Enhanced MI reporting and dashboards to manage risk profiling at different levels (from individual and business levels)

At the same time, we will be withdrawing support for our 5, 18 and 24 question questionnaires. The newer 10 and 20 question versions offer a much greater degree of accuracy and so we will be contacting clients using the old style questionnaires shortly with further details.

We will also be providing a range of supporting material including a technical guide, outlining risk profiling with Dynamic Planner and how advisers can make the most of it.

Enhanced workflow for Dynamic Planner

Our Spring release will also include changes to the workflows within Dynamic Planner. By segmenting the process, advisers will now be able to complete fact find data using a variety of routes for example. This modular approach will also allow us to deliver the particular Dynamic Planner tools and services selected by an adviser, more quickly and at a lower implementation cost than previously.

We are very excited by all these developments and look forward to sharing them with you on release day. If you would like to discuss anything we have mentioned further, please do get in touch with me or the team.

Kind regards

Ben Goss, CEO Distribution Technology