Retirement income options

It is currently possible to access your retirement pension plans after age 50 although the minimum age is rising to age 55 from April 2010. For most people however age 60 or 65 is a more realistic age from which to start drawing on your retirement savings.

Retirement is no longer a single point in time when you stop work at 5 o’clock on the day before your 60th or 65th birthday. Many people will continue to work, albeit in a reduced capacity, and use retirement savings to supplement income until some future date when they wish to give up work entirely.

When you have spent many years saving for retirement it is vitally important to make sure that you chose the most suitable way in which to obtain income for the years ahead.

People in final salary (also called defined benefit schemes) do not need to worry about purchasing their pension income (or annuity as it is more commonly known). Final salary schemes provide a regular income to the member and usually include spouse’s pensions and inflation protection automatically. You may want to take advice on whether to take the tax-free cash sum (also called pension commencement lump sum) and if so how best to invest it to provide for the future.

We can help and advise you with those decisions.

For those people with personal pensions and other forms of money purchase scheme (where there is a fund of money available for you to decide how you wish to take retirement income) you may need help and advice with the various options for taking tax-free cash sums and annuity income.

Older pension plans can include features such as guaranteed annuity options which may require analysis and advice to ensure that the most suitable option is taken.

We use open market comparison software to identify the most suitable option and best annuity provider for your circumstances.

Many people still take their annuity from the pension company that they have been saving with up to retirement. However all pension plans now include an ‘open market option’ which allows you to take your retirement pot to the best and most suitable provider for your needs.

Using the open market option can significantly increase your retirement income.

Our analysis and advice service will help you to decide which option is most suited to you from the range of options including: -

Conventional annuities.
Investment linked annuities.
Enhanced or impaired life annuities (click here for a list of relevant conditions).
Phased retirement plans.
Pension fund withdrawal (also known as income drawdown or unsecured pension).
Alternatively secured pension from age 75.

Where you have pension funds of significant value or a number of different types of pension plans from several companies we can prepare a detailed report analysing your retirement options and identifying whether the most suitable strategy for your circumstances, investment risk profile and objectives.

The Financial Services Authority provides a lot of useful information about retirement options which can be accessed from here: -

http://www.moneymadeclear.fsa.gov.uk/products_explained/retirement_options.html

You can also follow the links below to specific publications from the FSA: -

Retiring soon: - http://www.moneymadeclear.fsa.gov.uk/pdfs/retiring_soon.pdf
Retirement options: - http://www.moneymadeclear.fsa.gov.uk/pdfs/retirement_options.pdf
Income withdrawal: - http://www.moneymadeclear.fsa.gov.uk/pdfs/income_withdrawal.pdf

If you wish to discuss your retirement plans and consider the various options please contact Expert Financial Solutions.

Updated: December 2007

Expert Financial Solutions Ltd are independent financial advisers (IFA) / financial planners based in Witney, Oxfordshire. We serve the local community in and around Abingdon, Banbury, Bampton, Bicester, Burford, Chipping Norton, Cheltenham, Cirencester, the Cotswolds, Henley on Thames, Kidlington, Lechlade, Oxford, Wantage, Witney and Woodstock. We specialise in pensions, retirement planning, pension annuities, investments including PEP, ISA, OEIC, unit trusts and investment bonds, and inheritance tax (IHT) mitigation and trust investment. One of our advisers is a Chartered Financial Planner and we are proud of having Oxfordshire's only Resolution qualified and accredited IFA for pensions on divorce.