|
Services:
Options at Retirement
When you come to retire,
unless you are in a ‘final salary’ occupational pension
scheme, you normally have a number of decisions to make.
- You must decide whether you wish to take any tax
free cash to which you are entitled. (You must take any tax free cash you are
entitled to before age 75, or you lose the option.) You do not at this stage
have to draw an income from your fund.
- You must decide whether you wish to purchase an
annuity – for many people this will be the safest option, since the basis of
your income is guaranteed for the rest of your life. This could be:
- On a level basis, or increasing in line with
inflation (or at a fixed rate);
- For yourself only, or for yourself and your spouse
or civil partner; or
- Payable for a minimum period of 5 or 10 years and
then for life thereafter.
There are also with profit and variable rate
annuities.
- If you do not wish to purchase an annuity, you
must decide how much income you wish to draw from your fund. This can be
anything from nothing to 120% of the single life annuity that could be purchased
by the individual at the time (called an unsecured pension).
- Once you reach age 75, the maximum you can draw
falls to 90% of the annuity for a person of the same sex of age 75 (called an
alternatively secured pension).
In the event of your death
after benefits have been taken, or crystallised as it is
now termed, (and an annuity has not been purchased) any
unused fund is treated as follows:
- After benefits have been crystallised – the unused
part of the fund can be used to provide an income for a dependent or can be
returned to the estate, subject to a tax charge of 35%.
- If age 75 has been reached and an alternatively
secured pension is being drawn – the rules are complex and can involve very high
rates of taxation.
We can help you
consider the options pick the most suitable one for you. |
|
