All the options covered

Taking benefits from your pension, since April 2006, has never been easier. However, you should think carefully before deciding on a particular course of action. With some options, like a conventional Annuity, you cannot change your mind at a later date so what you decide now is fixed for the rest of your life.

As long as you are over age 50 (increasing to age 55 in April 2010) you can draw benefits. This could be just Tax Free Cash or a full blown Retirement Benefits Package tailored to suit you.

Whether you have made your mind up already or want us to guide you along the way, our expert affiliate retirement consultants can help you. They can provide advice and research on all UK approved options including:

Tax Free Lump Sum Only

Some people wish to access part of their pension benefits, usually the tax free cash part which can be up to 25% of your total fund value, as soon as possible. This would normally be done using an Income Drawdown facility which gives you access to the tax free cash but leaves the remainder of your Pension Funds invested to draw as an income at a later date.

Phased Retirement

You can arrange most personal pensions as a single plan, or as a cluster of many separate plans, sometimes called ‘segments’. You can use these segments to buy annuities or unsecured pension plans at different times. You must use all the segments to provide a retirement income by the time you reach the age of 75, either via a lifetime annuity or Alternatively Secured Pension. This process is called ‘phased retirement’.

Unsecured Pension (Income Drawdown or Pension Fund Withdrawal)

Unsecured Pensions are a popular alternative to buying a lifetime annuity. They allow you to take a Tax Free Cash Lump Sum and draw an income from your pension fund while the fund remains invested. The maximum level of income you can draw is about 120% of the level lifetime annuity payable to a single person of your age and sex; and the minimum income you can draw is zero. On the death of the individual in income drawdown, the surviving spouse/partner will have a number of options. They could continue with the income drawdown until they are age 75 or until the time their deceased spouse would have reached age 75, whichever is the sooner. The spouse could purchase a pension annuity or take the whole fund as a tax free lump sum and pay a 35% tax charge.

Conventional Annuities

Conventional annuities provide a guaranteed income for life. The income is neither subject to investment risk nor mortality risk. This means that it doesn’t matter what happens to stock markets, house prices or any other investments, and, the income will continue to be paid out, even if you smash the longevity record!!

Investment-Linked Annuities

An investment-linked annuity is similar to a conventional annuity in that it is simply a series of payments made at selected intervals in return for a pension fund. Unlike a conventional annuity, however, the pension funds that you use to buy this type of annuity are invested with the aim of being able to provide you with the potential for a higher level of income. Investment linking can be established using unit-linked funds (UL) or “with profits” funds (WP) for the underlying investment.

Enhanced Rates Annuities

Your smoking habits and medical condition or conditions, both past and present, can all affect your normal life expectancy. Some annuity providers now take this information into account when setting their annuity rates. In some cases, this can mean substantially higher income levels than those payable from standard conventional annuities.