Releasing Your Tax Free Cash Lump Sum Early!

When Do I Have To Buy An Annuity? Can I Release My Lump Sum Early?

When you save for your retirement through any kind of pension plan, the money you put in is free of tax and then grows tax efficiently. This is very generous of the government but this is as far as its generosity extends. You might think that the accumulated pension pot is your money to do with as you please. You would be wrong!

You may take part of your pension savings as a tax-free lump sum up to 25% of the value of your pension funds. If you're over 55 and have either a Personal Pension or old Company Pension from which you are not receiving benefits, you can release your money now, even if your pension was originally set up to an older age, say 60 or 65. You should bear in mind however that this is a complex area and it is wise always to take specialist advice.

You are no longer required to purchase an annuity with the remainder of your pension funds but there are strict rules and potential tax charges in place that hedge round what you can do with the money. The government's view is that we all get generous tax breaks to save for our pensions and that any money so accumulated should be used to create a pension rather than as a form of saving for our heirs.

You may opt instead of an annuity to take a Drawdown Pension this is the new name given to Income Drawdown since April this year, whereby you can take up to 25% of your fund and leave the balance invested. You may then take withdrawals, if you wish, each year, of between zero and 100% of the upper limit calculated by the Government Actuaries Department (GAD). In plain English this level is roughly what a level, standard annuity would pay to someone of your age.

Since April this year you may continue taking a Drawdown Pension without the requirement to buy an annuity after age 75. After this age, your upper limit will be reviewed on an annual basis rather than every three years as it is before age 75.

Leaving your pension funds invested means you are potentially at risk from adverse moves in the market value of what your savings are invested in. In addition your fund will not benefit from mortality cross subsidy; this becomes more significant the older you get. This can be a highly risky strategy. It is imperative that you make sure you get independent financial advice.

The Open Market Option Explained

A recent survey showed that 2/3rds of people buy their annuities (pension income) from the same provider with whom they built up their pension.

Many people are unaware that they have the right to give their pension pot to whichever annuity provider will pay them the highest income for life. This is known as an open market option. This can make a significant difference to the level of income you receive and therefore your lifestyle in retirement.

You can shop around and obtain quotations from all of the leading providers yourself, a time consuming exercise. Alternatively you can ask a specialist to do this on your behalf. Please complete our no obligation form and we will obtain a quotation for you based on the highest rates we can achieve for you.

Buying an annuity is one of the most important financial decisions you will ever make as it determines the level of income you will receive from retirement for the rest of your life.
It is therefore imperative that you obtain the best level of income from the pension pot you have built up over your working life to ensure you enjoy the highest quality of life in retirement.
Whether you have already decided or you require advice on the most appropriate annuity, or indeed if phased retirement or income drawdown would be more beneficial, then please complete the no obligation quotation form and we will advise you of the best rate we have to offer.

Will I Pay a Fee?

We are paid by pension providers for the work we do and do not charge you a fee.

Will You Shop Around For Us?

In the past, pension annuity advice has been difficult to find, but now by using our dedicated software we are able to make this specialist advice available to everybody.

Taking time now to shop around is time well spent, but you need to be aware of all your options, not just the annuity option. This is where we can help you.

WE ARE TOTALLY INDEPENDENT AND RECOMMEND FROM THE WHOLE UK MARKET.