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There are many retirement planning tools. What makes Parmenion’s special is the institutional quality of its modelling. The outputs of the IMT come directly from the Hymans Robertson Econoimic Scenario Service and Club Vita data, precisely the same tools used to advise DB pension schemes. Parmenion has made this technology available to all its platform SIPP users with the objective of securing better client outcomes from improved understanding of the risks and uncertainties of retirement planning.
Access to Hymans Economic Scenario Service
What assumptions should we use when drawing up a financial plan? Historic norms? Rules of thumb? Why not use a forward-looking, research-based model run by experts for use in the big league of pension management? The Hymans Economic Scenario service is the source of the stochastic forecasts produced in the Parmenion IMT. What’s particularly great about this modelling is that it’s being retrospectively checked for tolerable accuracy by the Hymans research team.
Portfolio mapping via funds to underlying asset classes
A good picture of the future performance of markets needs to answer challenges about specific portfolios. All 200 portfolios in the Parmenion MPS range are discretely mapped back to their underlying asset classes by Hymans, not Parmenion.
The big unknown in retirement is, how long will I live? Parmenion’s IMT accesses the Club Vita model based on three million DB pension lives. This is superior to using ONS figures which must include everybody’s life expectancies and therefore underscores affluent, advised lives. This can lead to meaningful error. The Club Vita data is also postcode specific, so without the intrusion of medical questionnaires, an adviser can give a robust outlook for a client’s chances of living well past the norm. Which is, of course, the challenge.
With a great investment model and accurate life expectancy data, all you need is an outline of portfolio size, portfolio risk level and your savings and withdrawal levels for your actuary to calculate the chances of your plan succeeding. This is call Plan Viability, and the Parmenion IMT will return this scoring with Hymans’ attestation in seconds. This is particularly useful in setting your firm’s parameters for its own limits to business risk and proposition structure under the auspices of PROD. It adds massive credibility to advice.
A trip to the future
As the IMT allows you to tap into an institutional model, it also allows you to price annuity purchase years into the future – as you’d expect if you see things from a DB scheme perspective. Based on the individual’s own life expectancy and a forward-looking analysis of bond markets, this special feature reinforces the need to bench test advisory investment strategies against the need or desire for back-end annuity purchase in later life, on a partial or full basis.
“The above article is intended to be a topical commentary and should not be construed as financial advice from either the author or Parmenion Capital Partners LLP. If a client wishes to obtain financial advice as to whether an investment is suitable for their needs, they should consult an authorised Financial Adviser. Past performance is not an indicator of future returns.”
Any news and/or views expressed within this document are intended as general information only and should not be viewed as a form of personal recommendation. All investment carries risk and it is important you understand this. If you are in any doubt about whether an investment is suitable for you, please contact your financial adviser.