Taking Pension Benefits

The value of pensions can fall as well as rise. You may get back less than you invested.

When it comes to taking your pension it’s important to get the right deal

When you retire is no time to discover that your plan locks you into a limited set of options.

There is now a wealth of pension choices available on retirement, so it’s important that your pension plan is tailored to meet your needs.

That’s why the correct planning beforehand is so important. It can make a difference of thousands of pounds to your income when you retire.

Choosing the right retirement option

Not so long ago pensions gave little choice to people when they retired. Generally, it was a case of being forced into a limited set of options.

Today, though, things are different. For many retirees, the best option will be to accept the benefits offered by their employer’s scheme. But for others, it will make sense to take advantage of the other options now available.

The trouble is the wealth of choices now available at retirement are complex. So, our advice to our clients is to take time to consider their options. Naturally, we will offer you our help, so if you’d appreciate some guidance, don’t hesitate to get in touch.

Contact us to find out more about the best options for taking your pension

The old way of doing things

In the past, more or less everybody had to take an annuity when they retired. An annuity provides a guaranteed income in return for a lump sum payment. If you choose this option, the income will continue to be paid for the rest of your life, and beyond if you are able to lock in security for your spouse.

As you might expect, annuities continue to be a popular choice with retirees. But, if you opt for an annuity, it’s essential that you shop around for the right deal. At Redwood we have a research service that will shop around on your behalf. Rates vary between providers. And, for certain groups of people, such as those suffering chronic illnesses, enhanced rates are available. So it’s a good idea to pick our brains before you commit to any provider.

The newer ways of doing things

The good thing about annuities is that the return on investment is guaranteed. But this guarantee allows no room for manoeuvre if for example one year you need more money.

As people enjoy longer life expectancy, and attitudes of retirees have changed, so people want more flexibility in how their pension is paid out.

  • Instead of taking an annuity, income can be drawn down from a pension fund, whilst leaving funds behind to allow further capital growth to take place
  • It’s also possible to take a quarter of your fund as a tax-free sum and keep the remainder of your pension fund intact.
  • There are also ways that the fund can provide benefits on your death for loved ones you leave behind.

In short, there are many choices to be made. But rather than set them all out here, why not take advantage of our retirement service? We can outline your options and guide you towards the correct choice. It’s worth remembering, too, that these more flexible options can be adapted from time to time. We can monitor them on your behalf and alert you to any changes that we believe you should make.

Contact us to find out more

Tax treatment varies according to individual circumstances and is subject to change.