Private Clients
Options at Retirement
As you move closer to retirement, you will realise that there are many ways in which you can take your pension income.
There is now a great deal of flexibility available at retirement, which starts from the earliest permitted age of 55.
One popular option is to set up a lifetime annuity. These can be higher risk and more expensive to operate, but in turn offer more flexibility.
The most popular alternatives are:-
Investment Linked/ With Profit Annuity
Investment Linked and With Profit Annuities provide you with the potential for an income that increases during your retirement. As they are linked to an underlying investment fund, they involve an increased level of risk.
Income Drawdown
This provides a flexible option but should only be considered by those with larger fund values. An Income Drawdown plan enables you to take a taxable income directly from your fund, leaving the remainder fully invested.
Phased Retirement
Rather than convert the entire pension fund into an annuity at the same time, Phased Retirement allows you to draw your benefits gradually over time, either by setting up an annuity or by moving more money into income drawdown.
Tax free cash
At retirement you will usually be given the option of taking a tax free lump sum which you can spend or use as you wish. You can normally take up to 25% of your pension fund as tax free cash.
A popular option is to use this sum to supplement your pension income in a tax efficient manner.
With such a range of options available, it is vitally important to ensure that you seek independent financial advice, enabling you to make a truly informed decision.