Last week, George Osborne axed death taxes for the under 75’s and gave people more choices when it comes to their pensions. The changes in pensions now brings annuities used to provide a retirement income into line with the options to keep your pension invested and draw on it.
I know I have written about annuity rates before but as it is such an important subject I thought that it would be worth going over some of the main points again.
News articles are claiming Pensioners take ‘the biggest gamble’ of their lives when they buy an annuity to provide income for their retirement.
Taking your pension benefits may be a ‘gamble’ if you make a choice without having considered all the facts and information available to you.
Many people approaching retirement are more interested in getting hold of their Tax Free Cash and do not give much consideration to the purchase of a plan that will provide them with a much needed income for the rest of their lives.
Anyone coming up to retirement will receive paperwork from their pension provider about 3 months in advance of their retirement date. This will detail the terms that they are prepared to offer you for an annuity.
They will also recommend that you consider the Open Market Option. You can usually improve on the rates offered by your own provider. You can also look at an Enhanced Annuity if you have suffered health problems.
But you do not have to buy an annuity!
There are many options available where you can keep your pension fund invested and this will give you much more flexibility:
- You can select an income within Government guidelines
- Your fund can benefit from the improving investment conditions
- You do not hand over your pension fund and lose control
- You can choice to buy an annuity at a later date – such as when you are older or if you suffer ill health
- The plan can provide guaranteed death benefits.
Making the right decision for you is not easy. Don’t ignore the options open to you by taking the first offer from your current pension provider, just because they send you lots of paperwork and you don’t understand it.
At Poole Townsend, we have specialist advisers who can help you make the right choice depending on your personal circumstances and requirements. For independent financial advice, turn to Poole Townsend.
Call us on: (01229) 811811 to discuss your financial options.