Timeline’s Tax feature calculates the client’s tax across multiple accounts and guaranteed income sources - including state pension, annuity, DB pension and rental income.
Do I need to adjust the planned spending downward at State Pension age?
No. The system automatically adds the full state pension amount when you set up the plan in the wizard.
Once you enter your planned expenditure from the portfolio, Timeline will deduct any state pension amount from planned spending when the client reaches state pension age. You do not need to reduce planned expenditure by the state pension amount at state pension age.
The same applies for any guaranteed income, including income from DB, annuity, and rental income.
You can also choose whether the income amount coming from any guaranteed income source, at the age that it kicks in, will be inflation adjusted or not.
If the client is currently 65 and the state pension kicks in at age 70:
Then the income that kicks in at age 70 from the state pension, will be adjusted for the cumulative inflation that occurred between client’s age 65 and 70, using 2.5% inflation collar for state pension and inflation collar 0% for other guaranteed income. If it is not inflation adjusted, then the exact selected amount will kick in. In both cases Timeline applies the appropriate amount of tax