Pensions

Retirement Options


From money purchase schemes you will be offered a tax-free cash sum, with an option to take a reduced pension (annuity). For FSAVC's, AVC's (post 8/4/87) and SERP's you will only be offered a pension (annuity).

The pension company will give you the option to purchase annuity with them or you have the right to shop around for the best annuity from other offices. If they offer a better deal you can transfer your fund value without penalty to that office, called an 'open market option'. This will then pay your pension.

  • Annuities
    There are several different types of annuities available, linked to with profit funds, stock market, or the guaranteed ones. They will offer a single life, joint life (pays out an income after you have snuffed it!), guarantees for 5 yrs, 10yrs and even life, level in payment, escalating by a fixed percent each year, a spouses pension as a percentage of yours. Remember the older you are when you come to purchase your annuity, the better rate you get. If you are in poor health, smoke, or have worked in sections of industry that do not have a good track record of ‘long livers‘, then you could shop around for an impaired life annuity. IMPORTANT - your annuity is taxed as earned income

  • Phased Retirement
    For those with large funds, you now have options as to how you can take your benefits. Your pension is divided up into an equal number of policies within your pension plan. From each policy you can take a lump sum and with the residual fund purchase an annuity, but you do not have to take them all at the same time. Therefore you can opt to take a number of policies over a number of years, the main benefit is that the older you are, the higher the annuity rate, it is useful when you want to take consultancy work and your income drops.

  • Income Draw Down
    Again for those who have substantial funds at retirement, but wish to take the tax-free cash, but do not want to purchase an annuity. They can then invest the residual fund value into a mixed portfolio that is designed to produce an income which is, broadly speaking, from 2% of the fund value to an amount equal to a single persons annuity. There are more scientific methods, but this gives you some idea. The portfolio is a mix of cash, fixed rate bonds, and some equity funds, the portfolio is reviewed every 3 yrs, but an annuity has to be purchased at 75yrs. Your spouse has some protection as well, for if you pop off first, then she can continue or purchase an annuity.

  • Occupational Pension Schemes
    You are provided with your options by the scheme, and your pensions are guaranteed for life, just like purchasing an annuity. But if you or your spouse is in poor health, or single, then it may be possible to transfer your benefits at retirement to a personal pension & purchase an annuity.

    Your company scheme is geared to provide a pension for the spouse who at best is 4/9th's of your pension.

For more information, please e-mail us, but before proceeding you must read our terms of business.