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Seek independent advice for best pension options; ADVERTISING FEATURE INDEPENDENT FINANCIAL ADVICE.

IF you're approaching retirement, what are your options with your pension fund? According to Richard Jones, of Security Financial Services, most pensions contain an open-market option which gives the investors the right to 'shop around' to see if they can buy a better annuity from another company.

He says the main options are to buy an annuity or move your pension fund to what's called a pension drawdown but, depending on your circumstances, it would be unusual to consider pension drawdown with a fund of less than about PS125,000.

"For those who don't want the uncertainty of pension drawdown, or those with more modest funds, we would probably be looking at an annuity to provide a pension income," he says.

Pension annuities generally have the following characteristics, he added: ? They convert your pension fund into an income stream for the rest of your life ? When you die, payments stop, unless you have chosen a joint life annuity or a guaranteed payment period ? Payments remain level or can increase each year ? You can usually choose monthly, quarterly or annual income payments ? They are simple to understand and give security and peace of mind Impaired Life or Enhanced Annuities are available for those with health or lifestyle issues and, says Richard, over the last decade the market for enhanced annuities has grown rapidly.

He explains that, with Impaired and enhanced pension annuities, the available pension is higher because of health factors that might affect your life expectancy and they can also be higher because of lifestyle factors, such as smoking.

Richard says: "Remember once you set up your annuity it can't be changed, so it's vital you choose your options carefully.

"You should consider both your immediate and long-term needs as well as those of any dependants."

He explains that a single life annuity is payable throughout life just for yourself and, with a joint life annuity, up to 100% of your income can be paid to a spouse or civil partner after you die.

With a level annuity your income will remain the same and won't increase but you should bear in mind the effects of inflation over time.

An increasing annuity will start lower than a level annuity but the annual increase will go some way to countering the effects of inflation.

Richard says your income can normally be guaranteed for five or 10 years so, if you should die within this time, the income will continue to be paid to your estate for the remainder of the guarantee period.

Without a guarantee, unless you have opted for a joint life annuity, your income will stop upon your death, even if you die shortly after taking it.

. ? Security Financial Services is authorised by the Financial Services Authority.

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Richard Jones of Security Financial Services
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Title Annotation:Features
Publication:Daily Post (Conwy, Wales)
Date:Oct 28, 2013
Words:466
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