Here we explain retirement options if you have saved or are saving for your retirement in a money purchase pension scheme like:
* A group personal pension plan arranged via your employer * A retirement annuity contract - (a personal pension sold before 1988 when personal pensions were first available) * A personal pension * A stakeholder pension * A free-standing additional voluntary contribution (FSAVC) scheme.
You have a number of retirement choices to select from your savings for pension, including:
* Phased retirement. * Income drawdown. * A lifetime, fixed term or enhanced annuity.
When the entire amount of your whole pension funds isn't in excess of 18k, you may take it in the form of a cash lump sum rather than periodic payment. This is known as trivial commutation but you should be no less than 60 to accomplish this.
Key points
It is possible to choose when you ought to transfer your own money purchase pension investment into income, there's no need to stop working to do this. You can not typically transfer your personal pension savings to a pension revenue before you are fifty five. You are able to usually take up to 25% from your pension account in cash, as a tax-free one time payment as well as the balance is used to obtain an income, which is taxed.
Annuities
Your life annuity will pay source of income throughout the rest your lifetime. An improved annuity gives a level higher of income to take into account any medical concerns you could have. A fixed term annuity gives an income over a set amount of time whilst offering the choice to research your needs at the conclusion of this period.
For those who have more than one pension plans, you might have a greater revenue by integrating them, although you aren't required to make use of them all together.
Annuity rates take account of the fact of which some individuals live longer than others. Those who live longer than average are going to take more off their annuity than, for example, someone that passes away three or four years after retirement.
Phased retirement
This may be a useful financial planning tool, for instance if you want to slow down gradually on working and start to switch your earnings with pension income. It also gives further flexible assistance to your heirs if you pass on. The part of the fund you have not changed into annuities may pay a pension or even a single payment for your remaining dependants, depending on the terms of the pension plan. You don't need to buy an annuity with your pension pot at retirement, you might consider delaying buying an annuity until a later date or choose not to purchase an annuity in any way and draw an income straight from your pension fund as an alternative. In the event you hold off purchasing an annuity you could expect an increased annuity rate due to the fact you are older but this may be dangerous to assume that annuity premiums are going to be higher if you postpone acquiring your annuity.
You can also postpone taking a state Pension, in return for obtaining a higher pension or even a taxed lump sum when you retire.
Income withdrawal
This allows you to draw earnings out of your pension fund while leaving it invested. There are two kinds: * Capped drawdown, when there are limits on the amount you can draw. * Flexible drawdown, when there are no limits enforced you can demonstrate you possess other income of a specific level called the Minimum Income Requirement. Income withdrawal is an alternative in which you start to attract revenue through just a part of your pension fund on one date, allowing the remainder of the fund intact.
Tips to help you check around for an annuity
Allowing for about six weeks to obtain estimates prior to when you want to obtain your annuity is a good idea, and with the many retirement possibilities open, it is important to make the most suitable decision, and you ought to think about seeking Independent financial advice from a qualified independent financial adviser (IFA).
* A group personal pension plan arranged via your employer * A retirement annuity contract - (a personal pension sold before 1988 when personal pensions were first available) * A personal pension * A stakeholder pension * A free-standing additional voluntary contribution (FSAVC) scheme.
You have a number of retirement choices to select from your savings for pension, including:
* Phased retirement. * Income drawdown. * A lifetime, fixed term or enhanced annuity.
When the entire amount of your whole pension funds isn't in excess of 18k, you may take it in the form of a cash lump sum rather than periodic payment. This is known as trivial commutation but you should be no less than 60 to accomplish this.
Key points
It is possible to choose when you ought to transfer your own money purchase pension investment into income, there's no need to stop working to do this. You can not typically transfer your personal pension savings to a pension revenue before you are fifty five. You are able to usually take up to 25% from your pension account in cash, as a tax-free one time payment as well as the balance is used to obtain an income, which is taxed.
Annuities
Your life annuity will pay source of income throughout the rest your lifetime. An improved annuity gives a level higher of income to take into account any medical concerns you could have. A fixed term annuity gives an income over a set amount of time whilst offering the choice to research your needs at the conclusion of this period.
For those who have more than one pension plans, you might have a greater revenue by integrating them, although you aren't required to make use of them all together.
Annuity rates take account of the fact of which some individuals live longer than others. Those who live longer than average are going to take more off their annuity than, for example, someone that passes away three or four years after retirement.
Phased retirement
This may be a useful financial planning tool, for instance if you want to slow down gradually on working and start to switch your earnings with pension income. It also gives further flexible assistance to your heirs if you pass on. The part of the fund you have not changed into annuities may pay a pension or even a single payment for your remaining dependants, depending on the terms of the pension plan. You don't need to buy an annuity with your pension pot at retirement, you might consider delaying buying an annuity until a later date or choose not to purchase an annuity in any way and draw an income straight from your pension fund as an alternative. In the event you hold off purchasing an annuity you could expect an increased annuity rate due to the fact you are older but this may be dangerous to assume that annuity premiums are going to be higher if you postpone acquiring your annuity.
You can also postpone taking a state Pension, in return for obtaining a higher pension or even a taxed lump sum when you retire.
Income withdrawal
This allows you to draw earnings out of your pension fund while leaving it invested. There are two kinds: * Capped drawdown, when there are limits on the amount you can draw. * Flexible drawdown, when there are no limits enforced you can demonstrate you possess other income of a specific level called the Minimum Income Requirement. Income withdrawal is an alternative in which you start to attract revenue through just a part of your pension fund on one date, allowing the remainder of the fund intact.
Tips to help you check around for an annuity
Allowing for about six weeks to obtain estimates prior to when you want to obtain your annuity is a good idea, and with the many retirement possibilities open, it is important to make the most suitable decision, and you ought to think about seeking Independent financial advice from a qualified independent financial adviser (IFA).
About the Author:
If you require Independent Financial Advice on pension plans and retirement planning CPS Financial Solutions offer independent clear concise financial advice to assist you within your later years.
No comments:
Post a Comment