Lever House
61 Chorley New Road
BOLTON
BL1 4QP
Tel: 01204 365165
Fax: 01204 364509
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Your retirement income choice could have a lifelong impact
The choice you make when turning your pension fund into a retirement income is one that needs great care. Get it wrong and you, and possibly your dependants, could spend many years regretting an irreversible error.
In summary, your two main options at present are:
Annuities the most popular way of producing a regular income from a pension fund. Its key attraction is that once payments start, they continue throughout your life - however long that is. Payments are guaranteed, unless you choose an investment-linked annuity. The main drawback of lifetime annuities is that they are inflexible; once they have been started they normally cannot be changed.
A number of major insurance companies actively compete in the annuity market, but some quote rates only for their own pension policyholders. This makes it vital that you check with us what is available in the market place before accepting your pension plan provider's offer.
Income drawdown A type of 'unsecured pension', income drawdown is a higher risk, more complex approach, generally only suitable if you have a variety of other income sources in retirement and can afford to dispense with the security offered by an annuity. Under income drawdown, withdrawals from your pension fund provide your retirement income. The maximum initial withdrawal level is set by HM Revenue & Customs (HMRC) - there is no minimum - and withdrawals must stop by age 75.
Income drawdown has a number of important advantages over annuities, which need to be weighed against the reduced security and additional running costs:
In summary, your two main options at present are:
• The value of your remaining fund can be paid out as a lump sum if you die before reaching age 75. A flat 35% tax charge would apply, but normally inheritance tax would not.
• You can vary your income at any time, so long as you stay within the HMRC maximum. However, the higher the income you choose, the greater the chance that it may not be sustainable.
• Your pension fund investments remain under your control.
We can provide you with detailed advice on all your options and help you in making that all-important retirement choice.
Past performance is not a guide to future returns. The value of investments and income from them can go down as well as up, and you may not get back the original amount invested.
The choice you make when turning your pension fund into a retirement income is one that needs great care. Get it wrong and you, and possibly your dependants, could spend many years regretting an irreversible error.
In summary, your two main options at present are:
Annuities the most popular way of producing a regular income from a pension fund. Its key attraction is that once payments start, they continue throughout your life - however long that is. Payments are guaranteed, unless you choose an investment-linked annuity. The main drawback of lifetime annuities is that they are inflexible; once they have been started they normally cannot be changed.
A number of major insurance companies actively compete in the annuity market, but some quote rates only for their own pension policyholders. This makes it vital that you check with us what is available in the market place before accepting your pension plan provider's offer.
Income drawdown A type of 'unsecured pension', income drawdown is a higher risk, more complex approach, generally only suitable if you have a variety of other income sources in retirement and can afford to dispense with the security offered by an annuity. Under income drawdown, withdrawals from your pension fund provide your retirement income. The maximum initial withdrawal level is set by HM Revenue & Customs (HMRC) - there is no minimum - and withdrawals must stop by age 75.
Income drawdown has a number of important advantages over annuities, which need to be weighed against the reduced security and additional running costs:
In summary, your two main options at present are:
• The value of your remaining fund can be paid out as a lump sum if you die before reaching age 75. A flat 35% tax charge would apply, but normally inheritance tax would not.
• You can vary your income at any time, so long as you stay within the HMRC maximum. However, the higher the income you choose, the greater the chance that it may not be sustainable.
• Your pension fund investments remain under your control.
We can provide you with detailed advice on all your options and help you in making that all-important retirement choice.
Past performance is not a guide to future returns. The value of investments and income from them can go down as well as up, and you may not get back the original amount invested.