Your Retirement Options
Choosing How you will take your Personal Pension
It takes many years of planning, saving and sacrifice to build up a significant pension so its important that you now make the most of it. Take time to understand and consider all your options and not just accept the quote from your pension plan provider as you could make an irrevocable decision. And thus give away additional income for you and your family or the option to pass the value of your pension fund onto your spouse and dependants when you die.
"Consider the open market option and select the best product from
the whole market"
What is the Open Market Option?
The open market option is your right to use any pension provider available to provide you with the best terms for your pension income whichever route you choose to produce that income i.e. annuities or unsecured pension (drawdown). This can have a significant impact on your pension income for you now and that of your dependants so its vital you consider this option.
Purchasing an Income
With personal pensions under current inland revenue rules you are able to take 25% of your personal pension fund as a tax free cash lump sum. The remainder of the fund can remain invested in an unsecured pension fund (drawdown) to provide you with an income or used to buy an annuity. If you wish to unlock the tax free cash from your pensions now and defer taking the income then the only route currently would be to transfer you fund into an unsecured pension (drawdown).
"Consider all Available Options"
The main options for producing income from your pension before age 75:-
- Traditional annuity
- Flexible annuity
- With Profits annuity
- Unsecured pension
- Guaranteed unsecured pension
Your circumstances and that of your family are relevant in this decision process such as your health age and requirements have a direct impact on the options you should consider.
Choosing the right options and the right product and provider is vital as this decision can be irrevocable once you have handed over your fund and made the purchase.
When you buy an annuity you give away your pension fund in return for a guaranteed set income for your life, traditional annuities can offer security as you know what pension income you are going to get. However if you have dependants or a spouse and they will rely on your pension income you will need to balance your requirement to maximize income with their requirement for income should you die earlier than expected, as the full purchase of an annuity will mean that much of that fund can be lost.
The more options you select with your annuity like spouses pension and inflation proofing at outset will have a direct impact on the income you will receive now and the amount your dependants will receive when you pass on if any, even after day one of your annuity purchase. The biggest gripe most people have with annuities is that investors lose control of the fund and the heirs can lose an inheritance.
Use our online service to quickly compare annuities. You can also get quotes for enhanced annuities if you have poor health or a medical condition, which may increase your income by up to 40%!
Compare Annuities Quotes Online
An unsecured pension unlike annuities does offer flexibility in terms of your decisions are open and not final. With most unsecured pensions you are dependant on investment performance to provide sufficient growth so that the level of income your have selected can be maintained. However there are now unsecured pensions in the market that offer a guaranteed income that will last for your life and that of your partner providing certainty of income without having to give away your pension fund.
You can with unsecured pensions choose to purchase an annuity anytime. You also have the option to transfer between different unsecured pension providers should the current scheme not meet your requirements or expectations.
To evaluate the merits of annuities and unsecured pensions most of us will need guidance so we can fully understand the choices we have and the implications of the decision we make.
Speak to our Independent Financial Adviser they will ensure you make the right decision before acting on any of the issues relating to your pension.
T: 01872 277291