HOME > PENSIONS > OPTIONS AT RETIREMENT
When you approach retirement, you have an important decision as to how
to switch on income from the pension funds you have accumulated during
your working life.
Some people will have final salary schemes that were arranged through
an employer. These pay a pension income that is dependent upon your
length of service and final salary.
Most people, however will have accumulated pension funds through a
money purchase arrangement. This is where the amount of pension you
receive is dependent upon the size of your pension fund and other
factors such as your age, gender and benefits that you choose to build
in to your retirement income.
Historically, low interest rates and increased life expectancy has
significantly reduced the income you can expect to receive from your
pension when compared to a decade ago. It is therefore important that
the decision you make is the right one.
At retirement you do not have to purchase your income from the same
company or companies with whom you have built up your pension funds.
You have the right to an Open Market Option, which is the ability to
transfer your pension funds to the provider offering you the highest
income or most appropriate contract to meet your retirement needs.
You then need to consider how you want to draw your income. There are
a number of options available, which include:
•Conventional annuity
•With profit annuity
•Investment annuity
•Income Drawdown (now known as Unsecured Pension)
•Phased Retirement
The most appropriate option will depend on a number of factors
including whether your retirement needs are fixed or flexible, your
attitude towards investment risk, the structure of your other income
and assets and the size of your pension funds. For those with larger
funds, a combination of the options available may be suitable.
•Conventional annuities
•With profit annuities
•Investment linked annuities
•Income drawdown
•Phased retirement
•Temporary annuities
