Archive for the ‘Pension Drawdown’ Category

Is Pension Drawdown a Realistic Option For You?

Wednesday, May 11th, 2011

When nearing your retirement, it is important that you consider all the options available to you to ensure you are doing what is best for you.

pension drawdown adviceTimes have changed and a conventional pension annuity is not the only choice any more, one popular option is pension drawdown.

What does pension drawdown entail?

The idea behind this option is that you are still able to withdraw funds from your pension fund, but you are not required to purchase an annuity as soon as your retire.

You have the option to receive a tax free cash lump sum when you retire, and then withdraw an income within limits and without the lock in for life associated with an annuity.

That sounds like a lot of hassle.

Although pension drawdown does sound like a confusing option which could cause a lot more hassle than by purchasing an annuity straight away, it is extremely beneficial to some people.

The real flexibility is the most popular advantage as you cannot get this level of control with an annuity. We understand that this can seem like a complicated process, but with advice from pension and retirement experts at Pensionlite, you can decide whether pension drawdown is best suited for you, together.

You mentioned flexibility. What can pension drawdown offer me?

The reason it might seem like we are banging on about flexibility is because pension drawdown is incredibly flexible! Pension and annuity options are renowned for their strict rules and inflexibility, which is why this is quite an exciting option.

If your pension won’t be your only source of income, you can vary the amount you withdraw and at times take nothing at all allowing your fund to build up. Over time a bigger fund will produce higher income.

Another bonus to pension drawdown is the fact that it allows you to delay buying an annuity.

The economy isn’t what it used to be, meaning that purchasing an annuity right now would only offer you a percentage of the income you could have received with the same pension pot 10 years ago.

We know that’s all in the past, but the simple fact is the older you are the better the annuity so keeping your pension fund invested for longer until the right time could be a financially sound move.

Okay. I understand the positives now, but there must be a flipside.

Unfortunately, there is always a flipside. With pension drawdown the disadvantages are that it involves a higher risk as you will not have the same guarantees which apply to an annuity. However, careful management of your pension fund in line with your attitude to investment risk can significantly reduce these concerns.

Pensionlite can help.

Our Free, Independent, No Obligation Retirement Reviews are designed to put you in a position of knowledge before you make any decisions.

It will not cost you a single 1p to accept a pension review and  recommendation report tailored to you, your circumstances and aspirations.

What have you got to lose?

Pensionlite carries the prestigious status of Chartered Financial Planners.

Our Chartered status, granted by the Privy Council, is our industries gold standard for financial planners and is currently held by less than 300 firms across the country.

This status brings with it serious obligations to ensure the advice, service and ongoing support we provide for you is of the highest quality, based solely on your researched needs and provided by someone of appropriate competency.

We offer whole of market choice and have no links or ties to any single business or organisation.

Our aim is to provide our clients with tailored solutions, created by advisers with particular skills and specialist qualifications.

Our advice process is always to gather a full understanding of our client’s needs, circumstances and aspirations together with detailed analysis of any existing arrangements and make written recommendations before any decisions or actions are taken.

We provide free, independent, no obligation review and recommendation reports covering all aspects of our specialist areas of work.

Knowledge is power and unless you know, how can you decide on a course of action.

We look forward to being of service.

To contact us telephone 01952 279 379, e mail enquiries@pensionlite.co.uk for more information about pension drawdown.

 

 

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What is Pension Drawdown?

Saturday, March 19th, 2011

Most people are unsure what to do when retirement is looming so it is important that you seek impartial financial advice from a qualified adviser. You should discuss all the options available to you to ensure you have considered every possible route.

Once the only choice, conventional lifetime annuities are now just one of many options open to you at retirement. Whether you decide on phased retirement, a flexible annuity, or pension drawdown, you should ensure that you have a financial plan in place before you retire.

we got pension drawdown advice with pensionliteI’ve heard about pension drawdown but what is it?

Pension drawdown allows you to access a tax free cash lump sum whilst continuing to draw an income from your securely invested pension fund. This allows you to receive a regular income, but still have the option to purchase an annuity at a later date.

How could it benefit me?

The flexibility of pension drawdown is the main reason that it attracts so many people considering retirement. The reduction in annuity rates has dissuaded thousands of people from simply purchasing a traditional lifetime annuity and forced many to consider alternative options.

By having a regular income, you are free to purchase an annuity at a later date when rates may have increased.

Another advantage to pension drawdown is the death benefits for your partner, as in the unfortunate event of your passing; your partner has the option to continue with the drawdown until you would have reached the age of 75. Your partner is then able to purchase an annuity or collect the fund by paying a 35% tax charge.

FLEXIBILITY. FLEXBILITY. FLEXIBILITY. That is what pension drawdown is about. You can choose to receive your cash lump sum and thereafter withdraw an annual income of 0% to 120% compared to a similar annuity.

There must be a catch!

That’s not true, there isn’t a catch as such but pension drawdown is riskier than purchasing a rigid annuity. It is an unsecured pension plan so it is extremely important that you contact a pension specialist for an analysis of your current situation and sound financial advice in regard to your options.

You might find that you do not enjoy the same guarantees found with an annuity, and when you do finally purchase an annuity, it might not be as large due to the withdrawals you have made over time.

This seems more complicated.

Due to the nature of pension drawdown it is a slightly more complex process than purchasing the lifetime annuity at the start of retirement. However, with the right financial adviser, your retirement could see you receiving a much higher annual income and increased flexibility.

How can you help?

If you choose Pensionlite, you are choosing an independent financial advisory firm, directly authorised and regulated by the Financial Services Authority (FSA). We are experts in pensions and retirement with extensive market knowledge who can guide you to a smooth but financially secure retirement.

By taking advantage of our access to the market, we can tailor the perfect recommendation for your retirement.

Pension&Investor Lite carries the prestigious status of Chartered Financial Planners.

What is Pension Drawdown?Our Chartered status, granted by the Privy Council, is our industries gold standard for financial planners and is currently held by less than 300 firms across the country.

This status brings with it serious obligations to ensure the advice, service and ongoing support we provide for you is of the highest quality, based solely on your researched needs and provided by someone of appropriate competency.

Pension & Investor Lite, is an Independent Financial Adviser firm, Directly Authorised and Regulated by the Financial Services Authority, specialising in Pensions & Investment.

We offer whole of market choice and have no links or ties to any single business or organisation.

Our aim is to provide our clients with tailored solutions, created by advisers with particular skills and specialist qualifications.

Our advice process is always to gather a full understand our clients needs, circumstances and aspirations together with detailed analysis of any existing arrangements and make written recommendations before any decisions or actions are taken.

We provide free, independent, no obligation review and recommendation reports covering all aspects of our specialist areas of work.

Knowledge is power and unless you know, how can you decide on a course of action.

We look forward to being of service.

To contact us telephone 01952 279 379,  e mail enquiries@pensionlite.co.uk and get pension drawdown advice.

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Advantages of Pension Drawdown

Sunday, November 21st, 2010

Is it time you start to consider your pension options when you retire? There are a wide variety of options available and many are unaware of the risks and advantages to each option. Possible pension choices include annuities, phased retirement plans, and pension drawdown. It is important that you consider the range of options, including pension drawdown as an alternative to pension annuities.

pensionlite - pension releaseIt is always highly advised that you discuss your options with a pension specialist before making a huge financial decision as the choice you make will have significant impact on your quality of life during retirement.

If you are seeking a pension plan with increased flexibility, you should consider pension drawdown, also know as income drawdown and pension fund withdrawal. The idea of pension drawdown is to allow you to withdraw a cash tax free lump sum from you pension whilst the fund remains invested, and gives you the freedom not to purchase an annuity until you are 75.

Choosing the drawdown option offers flexibility and control over your pension plan, providing you with a steady income and the opportunity to buy an annuity in the future.

In the unfortunate event of death, your partner has the option of continuing with the drawdown until you would have reached 75, at which point they could either collect the fund or buy a pension annuity.

Although this is a major benefit for those who choose pension drawdown, the main attraction is the increased flexibility.  Although you are not required to draw an income, you can withdraw anything from 0% to 120% of a similar annuity is allowed each year.

If you have another source of income, you can plan the amount you wish to withdraw each year. Also, if you are aware of your income from other sources and feel that this is enough, you can reduce the sum you withdraw to avoid higher tax rates.

This is a level of flexibility that an annuity just can’t offer. We are all aware that the economy is not what is used to be at the moment, and choosing this option can sometimes be wise as you might find yourself with a better annuity market in the future when you decide to purchase one.

It might seem like an obvious choice when you consider the benefits to pension drawdown, but it is not without its drawbacks. Drawdown involves much higher risks than a typical annuity as it is an unsecured plan and large withdrawals with reduce the amount of your annuity when you eventually purchase one.

Charges with pension drawdown are often higher than an annuity due to the extra management required, so you could find yourself paying more in the short term.

Some will prefer the security provided by a conventional pension annuity, whereas others may prefer to explore the alternatives and take up the flexible offer than drawdown provides. The benefits and advantages of pension drawdown are very clear, but it is not without its risks.

The attitude towards these plans will differ from person to person, which is why it is highly recommended that you discuss your options with an independent financial adviser.

Contact Pensionlite today to speak to one of our qualified pension and retirement specialists.

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Keeping Retirement Options Open: Pension Drawdown

Wednesday, October 27th, 2010

When retirement beckons everyone starts to consider which of the available pension options to take. Possible choices include pension annuities, phased retirement plans and pension drawdown and it can be extremely difficult to make up your mind. After all, the choice you make will significantly impact upon your retirement life, which everyone wishes to be a time of safe and secure comfort.

It is important for everyone considering which pension plan to purchase to seek guidance from an independent adviser and become familiar with all the options available. However, those seeking a pension plan which offers a great deal of flexibility may wish to consider the option of pension drawdown (also known as income drawdown or pension fund withdrawal).

Pension Lite - Pension DrawdownWhile many simply seek the inflexible security offered by a conventional pension annuity, others wish to consider the alternatives. The advantages offered by options like pension drawdown are clear, as they allow benefits and income to be drawn while your pension fund remains invested. Of course, this enables the individual more time to consider their retirement plans and the option to take out an annuity remains open.

Pension drawdown will allow you to obtain a cash lump sum tax free and continue to draw income from your pension fund while it remains securely invested, given you a steady income, flexibility and assurance that your pension fund can still be used to purchase an annuity at a later date should you wish to.

Pension drawdown has higher risks involved than conventional annuities as it is an unsecured pension plan, but many view the risk as being offset by the flexibility it affords. You are in no way required to draw an income, but a maximum amount of 120% of a comparable annuity is permitted.

One widely acknowledged benefit of pension drawdown is the improvement in death benefits for your spouse or partner. In the event of your passing your beneficiary would have the option to continue with the pension drawdown until such time as their deceased partner would have reached the age of 75, or indeed when they reach the age of 75. The beneficiary could then choose to use the pension fund maintained throughout the pension drawdown to buy a pension annuity. Alternatively, if willing to pay a 35% tax charge, they could collect the entire fund.

It is also possible to combine pension drawdown with a phased retirement plan, whereby it is possible to purchase a pension annuity with the invested pension fund. There are many annuities available and you want to get the best from your pension fund, so search the market for the highest rates and remember that once purchased an annuity is unchangeable.

The pension market can seem daunting, but there is a lot of advice and support available. Pension drawdown is just one choice open to people approaching retirement age, but it may just be the right one for you if flexibility, a steady income and time to plan are what you are seeking.

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Deciding On Pension Drawdown

Wednesday, September 1st, 2010

When deciding on the best pension plan to meet your needs it is important to consider ‘pension drawdown’ as an alternative to buying a pension annuity.

This allows you to withdraw sums from your pension fund rather than commit to buying an annuity the minute you retire. You still have to buy an annuity when you turn 75, but, before that, choosing the drawdown option can offer you valuable flexibility and control over your pension plan.

Although this might seem like yet another option to confuse the already tricky business of finalising your personal pension plan, the idea of having real flexibility might appeal to you.

Pensionlite’s independent experts can use their extensive market knowledge and their understanding of your immediate needs to help you decide whether the drawdown method is best suited to your circumstances.

The real flexibility that it offers is a huge attraction for some people. You can choose to receive a tax free cash lump sum and thereafter withdraw an annual sum of anything from 0% to 120% compared to a similar annuity each year.

If you have other sources of income you can plan in advance the amount you will take each year based on what you know your needs will be. That’s a valuable level of freedom that the finality of pension annuity agreement can’t offer. Moreover, if you know your earnings from other sources are going to be higher in a given year then reducing your annual sum can help you avoid higher taxes.

With the economy lacking a certain robustness at the moment, choosing a pension drawdown also means your pension fund remains invested until you decide the time has come to purchase an annuity. Although these investments can go down as well as up you might decide that you are likely to find a more favourable annuity market if you wait a few years before buying.

The flipside of the drawdown route is that there are not the same guarantees about the level of your income that you enjoy with an annuity. Large withdrawals will also reduce your pension pot and mean that your eventual annuity is not as large as it might be, especially if the investment of your pension fund has not been as successful as hoped.

You might also find you are paying more money in the short term. Charges are likely to be higher than those accrued by an annuity pension because your drawdown pension needs to be more closely monitored and managed by your pension provider.

Like most things related to pensions there are a number of advantages and drawbacks, the positives of real flexibility negated by the knowledge that you might be gambling with the value of future annuities.

It is hugely important to make decisions based only on proper research. Pensionlite can take the hard work out of reviewing your options, searching for the best deals and making the choice that will give you the personal pension plan that most adequately meets all your needs.

Using their access to the best deals across the pensions market Pensionlite are able to tailor a recommendation that will best suit you and help you decide if a drawdown pension is best suited to your particular circumstances.

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