Helping you in your retirement…
If you are planning to retire in the next few years you are no doubt thinking about how to take an income from the pension fund you have built up. There are several options available and thanks to the changes to pensions rules which have been introduced in recent years, and in particular, in April 2015, we now have almost complete freedom on how we take benefits from our pensions. One of the most important is the removal of the requirement to take your pension benefits by a specific age, so if your financial situation is such that you do not need to take an income or lump sum from your pension, you will not be required to do so.
The earliest you can take retirement benefits is from age 55. One popular option is to set up a conventional lifetime annuity, which pays a secure income for life. It is no longer compulsory to buy an annuity by age 75, although an annuity will remain a sensible option for many.
There are also alternatives to an annuity. These can be higher risk and can be more expensive, but are also more flexible.
On retirement, you will normally be given the option of taking a tax-free lump sum which you can spend or save as you wish. This tax-free cash is, as the name suggests, totally tax-free. You can normally take up to 25% of your pension as tax-free cash. Tax-free cash is also known as “Pension Commencement Lump Sum”.
Since April 2015, everyone (apart from members of some public sector final salary pension schemes) can take as much or as little of their pension pots as they wish at any time to invest or spend themselves, subject to tax at their marginal rate. This increases the options available to us and has the potential to give us much more control over our income in retirement but also makes it even more important that we obtain proper independent advice before committing ourselves.
Remember – we always offer an initial meeting free of charge at which we can discuss all the options available to you and their advantages and disadvantages.
The options available for taking your retirement benefits include the following: