We are currently putting together a comprehensive guide on the subject of your choices and options at retirement.
What is the best way to take benefits from any personal pension plan or employer sponsored money purchase plan that you have accumulated during your working lifetime?
Our guide considers six key options that a plan holder has at retirement;
* one of these options is of course to do nothing with the pension plan at this time. It may be that income can be derived from other sources such as investments or continuing to work perhaps part time, or from State benefits. In some circumstances it is possible that spending capital over a number of years is a viable strategy;
* a second option might be to phase pension benefits in over a period of time. This has a number of benefits including spending small amounts of the tax free cash benefit as income (and us reducing the overall income tax bill) and gradually buying annuities over time perhaps with the expectation that the rates available will tend to rise;
* buying an annuity and with this option do not simply take the first rate on offer from your current pension provider as it may not be the best available to you. Note also that once you have purchased your annuity there is no going back it is an irrevocable decision. We have identified at least 20 key points of consideration that will need to be explored in determining the right annuity for you;
* an alternative to consider for some, but not by any means for everyone, is income drawdown. Like with any financial decision there are advantages and disadvantages to income drawdown and key amongst them is investment risk. The benefit of using an adviser is that they will explore all the key points with you and only recommend the most suitable course of action;
* an alternative that is growing in popularity is known as a 3rd Way approach ( because annuity purchase and income drawdown represent the 1st and 2nd ways) and that is to combine a temporary annuity (one payable for say 5 or 6 years- rather than for life) and an income drawdown fund and very often a fund which contains some investment guarantees;
* the sixth options of course to “mix and match” each of the above options.
The right approach for you will depend upon your personal circumstances.
Each of us will have slightly different requirements and views about the future and it pays enormously to use the services of a qualified and experienced independent adviser to help you through the at retirement options maze
Watch this space for an announcement of the availability of our Income Options At Retirement guide.
