Pension freedoms arrive April 2015.
Want to maximise your retirement income?
We’d all like to think that we’ll have a level of income that will really let us enjoy our retirement. However, with the cost of living rising all the time, it’s more important than ever to consider all the options available, to help you get the most out of your retirement income – and your retired life.
What will happen to your pension?
When you retire, you’ll be able to access your pension savings. You can usually take a tax-free cash lump sum of up to 25%. Meanwhile, the rest is often used to buy a pension annuity, designed to give you a stable, guaranteed income for the rest of your life.
The March 2014 budget statement proposed changes to the way you will be able to take benefits from your pension from April 2015. These changes include you taking your pension as a lump sum, subject to your marginal rate of tax (usually, up to 25% will be tax free) or move your pension into drawdown. Please visit our Budget 2014 page for further information.
Open Market Option (OMO)
What you might not know is that you don’t have to take your pension income as an annuity from the same company that you’ve been saving your pension with. The ‘Open Market Option’ means that everyone can shop around all the pension annuity providers in the market to get the best possible guaranteed and secure income in retirement. There are sometimes significant differences between the incomes that pension annuity providers will offer you. Visit our Annuity Calculator to see how much your pension will provide.
How long will your pension last?
A report published by the International Longevity Centre – UK clarified that most people are risk averse and would therefore favour security over volatility even if extra volatility offered the potential for higher returns. 75% of the entire sample of 5,000 people agreed with the statement:
“ I would prefer a secure guaranteed income in retirement over an income that might rise or fall depending on returns in financial markets”.
If you would like to speak with a consultant, call us on 0800 098 7050.