There are now a significant number of options available to those seeking to access their personal pension benefits, which are available once you attain age 55, but what are they? And how do you make the right choice, given today’s economic climate and historic low annuity rates?
Since April 2011, there is no longer a requirement to purchase an annuity by age 75, as this upper age limit has been removed. This means that annuity purchase can be postponed indefinitely or avoided completely.
Essentially, there are two main options available to you, which is to either purchase a secured pension or a drawdown pension.
A secured pension is by way of purchasing a lifetime annuity. There are a few different types of annuities available, such as conventional and enhanced/impaired life and many different options which can be added at outset depending on your circumstances. The importance of choosing the right annuity is vital as once purchased, it cannot be changed or amended in any way.
With a Drawdown pension, your pension fund remains invested in the financial markets and you can choose the level of lump sum and income you wish to withdraw within certain HMRC limits. Drawdown plans can be quite complex and again there are a number of different types, such as capped and flexible drawdown. These types of plans require on-going investment and tax advice to achieve your pension objectives.
It is worth noting if you are considering an annuity purchase, that from December 2012 there will no longer be any difference in annuity rates between males and females; this is likely to have a detrimental effect on some annuity rates.
With there being many different approaches to accessing lump sum and income from Personal Pension Funds today and with current poor annuity rates, it can be a difficult decision for you to choose which options are right for you both now and in the future.
If you need to access your personal pension benefits during the next six months, why not let Cullen Financial Planning help you with those difficult decisions. Our consultants will engage with you to understand your needs and objectives and then create the right retirement solutions for your personal needs.