Planit:Pension and Other Revenues
From Planipedia
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The Pension and Other Revenues screen is where you’ll record any revenue streams anticipated over the course of the client’s lifetime. When doing retirement planning, recognition of expected pension benefits is critical. This includes both government sponsored pension plans as well as company sponsored plans. Identify below any pension benefits that your clients will be eligible to receive.
The screen will be pre-populated with any government benefits that are applicable as illustrated here.
Please Note: that this is determined based on your entries on the Personal Information screen relative to eligibility for various government benefits. You will also notice it will carry over any salaries that were entered in on the Cash flow screen. A NEW feature is the ability to change the index rate on the salary. This can be done by clicking on the edit beside the Salary and change the index rate to 0% or some other rate that is less than or greater than the default.
Other Revenues - Aside from government benefits, you might add an expected inheritance, residence downsize capital, a defined benefit pension benefit or any other revenues the client may expect to receive.
Details of Pensions
The “Add” button will allow you to insert additional revenue expected.
Index Rate – Defaults to the inflation rate set on the Personal Information screen but can be adjusted as required on each revenue stream.
Percent Taxable – Identifies the portion of the revenue stream that will be subject to tax at your normal rates. Note some revenue streams, such as an inheritance would be non-taxable and thus a tax rate of 0% is used. In this example the revenue is a pension and thus it will be fully subject to tax in the year or receipt.
% On Death or Disability – Because many documents incorporate needs analysis on death, or disability, you need to identify how each revenue stream will be impacted by these events. Sometimes it’s obvious what’s appropriate here, but other times you have to give some thought to the issue.
You’ll also note that the Pensions & Other Revenue screen has an expand option. If you click on the “+” symbol beside a revenue, that item will expand to show you the percentage and/or amount that will continue on Death or Disability based on the data entry you did in each item. You may also expand the whole screen by using the “+” symbol on the title bar.
Model As – One very sophisticated feature of Planit is the ability to have the system model a solution to your client’s shortfalls. We call this the Auto Model process. However, when this modeling takes place, we need to know how to treat these revenue streams in the event that the client has to defer his/her retirement due to their inability to achieve their objectives. The “Model As” field allows you to identify if this particular revenue stream has a “Fixed Period” associated with it . . .meaning that it will be paid out on those dates and a change in the retirement date will have no impact. This would be the case for something like an inheritance. However, with a pension as illustrated above, if the client has to work longer, we have to recognize that the pension will also be deferred. Thus we set this item to “Start During Retirement”. To read more on the Model As feature please click here.
Additional Increase – In the earlier fields we already identified if revenue is indexed to inflation, but we also have to recognize with pensions that are formula driven that the benefits under the pension may increase if the client works longer. A typical example would be a 2% defined benefit pension plan. If the client works 2 years longer . . . his pension would be 2% higher for each year of service. Thus in the above example we have indicated that the Additional Increase will be 2%.
Tax Deductions/Relief’s – In rare cases you may wish to incorporate some extra ordinary tax deduction into a long-term analysis. This flag identifies an item to be not a revenue stream, but rather a tax deduction.
TIP: This is the screen where you would identify any defined benefit pension plan benefits that the client anticipates receiving. Pensions are entered in today’s dollars assuming the client works with their employer to their target retirement age. Thus when calculating the pension, the formula would be used recognizing their years of service to date, plus the remaining years they will work until retirement.
Once you have reviewed and entered all the revenues you may then click on the “Next” arrow to proceed to the next client data entry screen.
Mini Movies on Pension and Other Revenues Screen
Shows how to enter in a Life Pension:
Length: 3min 55 sec
Briefly shows how to enter a Pension Bridge:
Length: 1min 39 sec
Defined Benefit Pension Plan:
Length: 1min 46 sec
How to enter into an Inheritance:
Length: 1min 57 sec
How to enter the appropriate date for a Sale of a Business:
Length: 2min 59 sec
