The good news is that pensions have actually kept up with the changing retirement landscape and now offer far more freedom than they have ever done previously. You are now free to draw from your accumulated pension pot at from age 55 whether still working or not and can draw out as much or as little as you like without restriction. 25% of your pot remains tax free and the balance incurs income tax but the access to lump sums and variable income can be a big help.
You can still purchase an annuity to provide guaranteed income or take flexible unsecured pension income (also known as income drawdown). Annuities are designed to provide a known benefit for life regardless of how long you live but don’t typically offer a lump sum death benefit. Income drawdown is much more flexible but as your pot remains invested it is down to investment performance over time to ensure your income is maintained so your income can reduce or run out altogether. You can also mix and match the two options to get the best of both worlds.
More choice in how and when we take our retirement income can only be a positive thing but with more choice comes more complexity and risk. Should you take a guaranteed income that dies with you or a flexible pension that could run out? It has never been more important to fully review all your pension options before taking a scheme pension or annuity from your current pension provider. Shopping around can significantly increase the income you may receive. The key factor today is looking at all your likely retirement needs and planning a pension solution that most closely matches this.
Ill heath pensions
Triviality and smaller pensions
Cash flow Forecasting
Retirement income projections