The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.
Tax treatment varies according to individual circumstances and is subject to change.

Navigating your choices

There’s a lot to think about when it comes to retirement. Your adviser will be able to help you make the right choices by taking into consideration your unique circumstances.

When heading into retirement it’s important to know what your income choices are so you can make the right decision on how you want to withdraw your hard earned retirement savings. Your adviser will take into consideration your financial circumstances which are unique to you and advise on what the most appropriate options are.

Taking a tax-free lump sum

You can take 25% of your pension fund as a lump sum, completely tax free.

Creating a retirement income

There are two ways you can use your pension to do this:

  • Buy an annuity

  • Invest in flexi-access drawdown

Annuity

What is an annuity & how does it help?

An annuity will pay you an income until you die. The fact that this income is guaranteed is an advantage of annuities over other income options and makes it a sensible starting point for your retirement planning.

We believe it’s essential for you to receive a regular income to cover your day-to-day expenses. However, guarantees come at a cost.

The amount of income an annuity pays you depends on: the size of your pension fund, and how long you might live based on how old you are now. So the older you are, the more income you will receive. Your annuity payments form part of your total taxable income and incur income tax.

Shopping around - The Open Market option

You do not have to accept the annuity your pension provider offers you. Despite this many retired people don’t shop around.

If an annuity is appropriate for you, your adviser will search the whole of the market to identify the right annuity for your needs. This can make an enormous difference to your retirement income.

Where appropriate, your adviser will be able to help you choose the right type of annuity for your circumstances:

  • One that pays you a guaranteed income until you die and then stops or

  • One that pays you a guaranteed income until you die and then continues to your surviving spouse or dependant.

  • One that stops paying as soon as you die
    or

  • One that guarantees to pay out for a minimum time, for example five years, even if you die earlier

  • One where the income stays the same
    or

  • One where the income increases each year.

Flexible Access Drawdown

Flexi-access drawdown

Flexi-access drawdown is a term used to describe withdrawing money directly from your pension savings, rather than purchasing an annuity, which is a type of insurance contract.

You can think of flexi-access drawdown as a bit like a bank account. You keep control of your pension fund, investing it and drawing down income as you need it, when you need it. You have complete flexibility over how much you take out and how often you take it. Once you have drawn your 25% tax-free cash entitlement, any further withdrawals are subject to income tax.

  • You could withdraw too much too quickly and run out of money.

  • You withdraw too much too quickly and run out of money. We call this the ‘risk of ruin’.

Speak with one of our Pension and Retirement Advisers …
Call us on +44 7932 266 717

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