Are you coming up to retirement?

Need pension advice in Belfast?The financial decisions you make at retirement will affect your income for the rest of your life, so it is vital that you are fully aware of your options.

Most pensions allow you to take 25% as a tax-free lump sum, with the remaining fund used to provide an income in one of a number of ways. The most popular option is to buy a lifetime annuity, which pays a regular income for the rest of your life. This is the most straightforward route and the income is fixed from the start (although there are investment-based annuities available), but there are many options to be aware of – for example should the annuity be set up on a joint life basis to provide for your spouse or partner in the event of your death?

And don’t assume you have to tick one of the boxes from your current pension company – you will usually get a much better deal by shopping around. Research has shown that a third of pension holders don’t use their “open market option” and this could mean losing out by thousands of pounds a year. Shopping around is particularly important for smokers or people with health issues, as even a minor condition such as high blood pressure can lead to an enhanced annuity rate.

Once an annuity is purchased it cannot be altered, so this may not always be the best option. If you are comfortable with some risk with your pension fund and the level of income then you could consider pension drawdown, where your pension fund stays invested and you have much more flexibility with the timing and amount of withdrawals. With drawdown you can still choose to lock in to an annuity at a later date.

There are also some new products in the retirement market such as fixed term annuities, which allow you to set up pension drawdown with a guaranteed sum left after a fixed period to purchase an annuity. These products still carry some risks but can be useful in some circumstances.

So be aware of your options, allow plenty of time to make your decision and take professional independent advice if you need it. Then enjoy your retirement!

For a free guide to your retirement options, or for further advice, contact Emma Greer; tel 028 90229798 or e-mail emma@freedom-financial.co.uk.

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