Retirement Options Guide (APR 2020)


You’ve worked hard for your retirement, but before you can start enjoying it, you’ll need to decide how your pension will provide the income you need to live on.

This guide contains a substantial amount of information so the following summary will hopefully be of assistance but should you wish to read the whole guide click on the link below:

A GUIDE TO RETIREMENT OPTIONS.pdf

 

The following table shows the different ways of accessing a personal pension plan:


LIFETIME ANNUITY

SCHEME PENSION

PHASED RETIREMENT

EXISTING DRAWDOWN PENSION - CAPPED

FLEXI-ACCESS DRAWDOWN

UFPLS

Regular and secure income for life

Regular and secure income for life

Part of your fund and part of your tax free cash are used in segments to provide annuity income.

Tax free cash lump sum paid at outset and fund remains invested.  Income can also be selected if required.

Tax free cash lump sum paid at outset and residual fund (subject to income tax) can be accessed immediately.

A lump sum is paid up to the full value of the plan.  No regular income.

Tax free cash provided at outset and fund used to purchase an annuity paid for life.


Tax free cash paid at outset and fund used to provide income for life.

The balance of the fund not used for income / tax free cash remains invested with a view to providing higher future benefits.

The balance of the fund not used for income remains invested with a view to providing higher future benefits.

Immediate access to the entire fund to provide income with no limits. 25% Tax Free Cash the rest subject to income tax.

Immediate access to as much of the fund as required. Of the amount paid out, 25% is paid free of tax with the rest subject to income tax.

Your annuity income is paid at least annually and can increase, decrease or remain level in payment.

Your scheme pension is paid at least annually and can increase or remain level in payment.

Your starting annuity is smaller, but is supplemented by a portion of your tax-free cash sum.

You can choose the income you want, and when you want it, between nil and 150% of an equivalent single life annuity.

You can choose the income you want, and when you want it.

Can be paid monthly. You can choose when and how much of a lump sum you require.

Additional options can be selected at outset such as annual increases, spouse’s benefits or guarantees which reduce your own income.

Additional options may be offered at outset such as annual increases, spouse’s benefits or guarantees which reduce your own income.

Each year you decide how much fund to use for annuity purchase and how much tax free cash is used to supplement your income.

If investments do well, you may benefit from higher future income payments, and vice versa.

On death, if there is any fund remaining then it is  available to pay benefits to your beneficiaries.

As long some funds are left in the plan, if investments do well you may benefit from higher future lump sum payments.  

Once you have bought your annuity, you usually cannot change your mind or change benefits. On death there may also be the option of a capital payment less tax.

Pension income paid directly by scheme. Once in payment you cannot change your mind or change the benefits.

Because you don’t commit all your funds to buy an annuity immediately, you keep your options open.

On death, the remaining fund is available to pay benefits to your beneficiaries.

Policyholder must advise all other ‘active’ pension plan providers that they have flexibly accessed their benefits within 91 days, or face possible HMRC fines.

Policyholder must advise all other ‘active’ pension plan providers that they have flexibly accessed their benefits within 91 days, or face possible HMRC fines.










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