Planning what to do at retirement
There are a number of options available to you depending on the type of Pension plan/s or scheme/s you are a member of.
An Occupational Final Salary scheme for example will offer a retiring member a yearly pension or the option to commute some pension income to provide a tax free lump sum.
These types of schemes generally offer a dependants pension on death and normally increase each year to offset inflation.
Other forms of Pensions including Occupation Money Purchase, Group Schemes, Personal Pensions and Executive Pensions allow the member to use their pension fund/s to exercise their open market annuity purchase option rather than being forced to purchase an annuity from the Pension company.
By shopping around for an open market option annuity it will take into account age, health, smoking status and other factors such as where somebody lives, ultimately this should lead to an improved annuity each year in comparison to the pension company. Our Place recommends contacting John Boyce of ACS Financial planning 0121 439 5614. You can learn more about ACS Financial Planning by clicking here.
With these types of pension rather than use all of your fund/s to purchase an annuity, it is worth considering taking your tax free cash entitlement of 25%, although some schemes may have a higher tax free cash percentage than 25%, so you should confirm this via your pension company or you can speak to a financial advisor.
Above are the more traditional at Retirement options, but for the right clients it may be applicable to consider one of the various forms of Pension Drawdown.
This is a sophisticated area and isn’t right for some people, so we would recommend obtaining professional advice.
The various forms of Drawdown may allow the option to take tax free cash, but leave the remaining fund invested or start taking an income from the remaining fund, subject to certain maximums allowed.
Or if a tax free lump sum isn’t required initially, phased drawdown allows you to take withdrawals for example at your discretion from your pension funds, leaving the remaining funds invested.
You could also potentially consider phased annuity purchase as an alternative.
Choosing the most suitable option is important and we recommend contacting a financial advisor to help you explore the various options in order for you to make an informed choice.
To receive a complimentary guide covering Wealth Management, Retirement planning, or Inheritance Tax planning, contact John on 0121 4395614, by email [email protected] or visit www.sjpp.co.uk/acsfinancialplanning for more information.
For post retirement financial advice click here.