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invested INTEREST; With Max Roberts BSc DipFA Financial Planner.

Byline: Max Roberts

IF you have a personal pension, there are a number of options available to you when it is time for you to take your pension benefits. A couple of factors are the same regardless of the method used to provide your pension income: you must be at least 55 years old to take pension benefits and up to 25% of the pension fund that you have saved can be taken as a tax free lump sum. After that, there are a number of ways of getting an income from the remaining 75% of your pension fund. The main three are summarised below.

A Lifetime Annuity is currently the most popular way to utilise a pension fund to generate an income in retirement. A lifetime annuity is an arrangement that pays you an income for the rest of your life, bought with the pension fund you have saved. You don't necessarily have to purchase an annuity with your existing pension provider; you could take your pension fund and shop around the market to find the best annuity rate. This is called an 'open market option'.

Annuity rates are based on the Government Actuary's Department (GAD) rates, which are calculated using age, 15-year gilt yields and at the moment, gender. The main advantage of a lifetime annuity is that the income you will receive is guaranteed for life.

This however, can also be a disadvantage, as once you start your annuity you can't change it.

There are additional options available (at the cost of reducing your initial income level), such as: ? Guarantee Period: this option guarantees that the annuity income will continue to be paid into your estate if you die before guarantee period ends.

. ? Spouse's Pension: this option guarantees that the annuity (or a portion of it) continues to be paid to any surviving spouse after you die.

. ? Increasing Income Level: this option increases your income each year, usually by inflation.

Given the current economic conditions, annuity rates have plummeted to an all-time low in recent years, so many people nearing retirement have been wary of locking into an income for life.

Other options available include drawdown pensions, and a fixed term annuity.

The above article is for information purposes and should not be treated as advice. Individual circumstances should always be considered prior to purchasing any financial products.

For further information contact Sanlam Private Wealth by e-mailing spw@sanlam.co.uk or calling 0800 328 2638. Sanlam Private Wealth is a trading name of Sanlam Private Wealth UK Limited.

Authorised and regulated by the Financial Services Authority.

The above article is for information purposes and should not be treated as advice. For further information contact Sanlam Private Wealth at spw@sanlam.co.uk/0800 328 2638
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Title Annotation:Business
Publication:Daily Post (Liverpool, England)
Date:Jul 30, 2012
Words:459
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