Retirement Options

There are numerous options on retirement. Taking informed, expert advice from people who know your circumstances and understanding your requirements is vital. The rules change in 2006. Please refer to our Pension Simplification Newsletter.

Some of the options:

At retirement, your pension provider will convert the fund built up to a life time income (an annuity), afeter you have taken any tax free lump sum entitlement. This is secure; once in payment the income will not fluctuate with investment conditions. You can have a level or escalating income and may provide dependants’ benefits. Some, usually older with profit, pensions have built in annuity rates which can be significantly higher than those that are available today. We would usually advise our clients to take advantage of these if available.

If the existing pension company's annuity rates are not the best, the total funds can be transferred to an alternative annuity provider on the open market. Charter can advise on the whole market to obtain the best rates for our clients.

For those who wish to undertake a little more risk in an effort to obtain a higher long term income, with profit and unit linked annuities are available. Of the two, with profit annuities are the lower risk investment offering an income which will participate in the providers with profit returns. The unit linked annuity is linked to a provider's managed funds and can fall as well as rise depending largely upon the returns achieved by stock market investments. Further details of these options can be provided on request.

This is a transfer to a special pension plan that allows you to draw your income out of the fund taking a tax free lump sum if required, leaving the remaining fund invested for your own benefit.

It is attractive to those who do not like the thought of the fund being lost an death, as is the case with annuity purchase. The fund would be available to dependants instead.

However, there are risks – your income can fall if the value of your fund falls and high withdrawals can erode the value of the fund even if investment returns are reasonable.

Income Drawdown requires regular review – we currently provide half yearly reviews for clients – and expert advice and is therefore a more expensive option to annuity purchase, but one with significant attractions.

This is uses a series of 1000 personal pension policies, which enables clients to encash policies as required to generate income in a tax efficient manner by using instalments of tax free cash each year together with much smaller drawdown payments to make up your total income requirement.

For those who choose to leave retirement funds invested and draw off an income, then tailoring a bespoke portfolio of investments is vital, as is monitoring this regularly to ensure that it continues to meet the needs for income and capital protection. Our Tailored Asset Management service is ideally suited for this purpose. Please email us for further details.