 Rather than using your pension fund to buy an annuity at retirement, you may prefer to use Pension Drawdown (unsecured income) on your pension fund and wait until they are older when annuity rates could be higher.
Alternative you could phase your retirement where only part of your fund is used and your tax free cash can be used to supplement your income. Either way you would avoid purchasing an annuity until a later date.
Both pension drawdown (unsecured income) and phased retirement will require a fairly large initial fund value in order to make it worthwhile, usually about £100,000. It is also more suitable if you have other sources of income or capital as well.
Initially you are entitled to draw your tax-free lump sum (usually 25%) and then select a level of income. The maximum being 120% of the Government Actuary’s Department (GAD) rate and the minimum being nil. Therefore should you wish to access capital and not income this could be done. The initial maximum level of income is usually higher than the amount from buying an annuity but very much dependent on individual circumstances.
One of the benefits of drawdown is your remaining fund will continue to be invested and this is where our advice can be invaluable. Like any other investment we would monitor your funds and make recommendations on an ongoing basis to maximise the growth of your pension within a risk tolerance you are comfortable with.
We can review your pension provisions and suitability by completing our let us help you form when we can provide a no obligation review of your arrangements. Why not look at our testimonials from clients, many of which are using pension drawdown and enjoying the benefits.
Pension Drawdown (Unsecured Income) is not suitable for everyone, please read our disclaimer. Before making any recommendations regarding pension drawdown a full assessment of your circumstances will be required.
|