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    Retirement Planning Service

    How will you ensure you achieve the lifestyle you deserve?

    Retirement should be one of the most enjoyable and fulfilling stages of your life. It should offer exciting new opportunities and the financial freedom to fulfil your dreams… if you have planned well enough in advance.

    It is essential that you start to plan for your retirement as early as possible, so that you can live comfortably, in the knowledge that your lifestyle needs are covered. This will mean careful consideration of your pension fund throughout your working life.

    At the heart of planning for your retirement is to make sure you have enough money to enable you to spend your time the way you want to; to do those things you always intended to do but never quite managed to.

    Today, you have a much greater choice about how you spend your accumulated pension fund, but there are also greater risks involved if you get it wrong. The responsibility is yours to make sure your pension savings last as long as you need them to. Typically, this could be between 20 and 30 years, or even longer, which is why it is essential to obtain professional financial advice.

    Retirement funding is one of the biggest financial decisions you will make in your lifetime, and it is now even more complicated.

    The size of your pension pot and amount of income you receive when you retire depends on several factors:

    • how much you pay into your pot
    • how long you save for
    • how much your employer pays in (if a workplace pension)
    • how well your investments perform
    • what charges are applied by your pension provider
    • how much you take as a cash lump sum
    • the choices you make when you retire
    • annuity rates at the time you retire – if you choose the annuity route.

    Using Your Pension Pot

    More choice and flexibility than ever before

    Under the pension freedoms rules introduced in April 2015, once you reach the age of 55, you can now take your entire pension pot as cash in one go if you wish. However, if you do this, you could end up with a large tax Income Tax bill and run out of money in retirement.

    It’s essential to obtain professional advice before you make any major decisions about how to access your pension pot. You can now mix and match various options, using different parts of one pension pot or using separate or combined pensions. You might be able to delay taking your pension until a later date; your pot then continues to grow, tax-free, potentially providing more income once you decide to access it.

    It’s important to check with your pension scheme or provider whether there are any restrictions or charges for changing your retirement date, and the process and deadline for telling them. Also check that you won’t lose any income guarantees – for example, a guaranteed annuity rate (GAR), by delaying your retirement date.

    The value of pension pots can rise or fall. Remember to review where your pot is invested as you get closer to the time you want to retire and arrange to move it to less risky funds, if necessary. If you want to delay taking your pot but your scheme or provider doesn’t have this option, obtain advice and shop around before moving your pension.

    Flexible retirement income – Flexi Access Drawdown (FAD)

     With flexi-access drawdown, when you come to take your pension, you reinvest your pot into funds designed to provide you with a regular retirement income. This income may vary depending on the fund’s performance and it isn’t guaranteed for life, unlike a lifetime annuity – so you need to manage your investments carefully.

    You can normally choose to take up to 25% of your pension pot as a tax-free lump sum. You then move the rest into one or more funds that allow you to take a taxable income at times to suit you. Increasingly, many people are using it to take a regular income.

    Flexi-access drawdown is a complex retirement income solution so it’s important to obtain professional financial advice and discuss the options available. You need to carefully plan how much income you can afford to take under flexi-access drawdown, otherwise there’s a risk you’ll run out of money. This could happen if:

    • you live longer than you anticipated
    • you take out too much money in the early years of retirement
    • your investments don’t perform well.

    If you choose flexi-access drawdown, it’s important to regularly review your investments.

    Guaranteeing a regular retirement income for life

    You can choose to take up to 25% of your pension pot as a one-off tax-free lump sum, then convert the rest into a taxable income for life, called an ‘annuity’. A lifetime annuity is a type of retirement income product that you buy with some or all of your pension pot. It guarantees a regular retirement income for life. You can also choose to provide an income for life for a dependent or other beneficiary after you die.

    This retirement income from an annuity is taxed as normal income. Typically, the older you are when you take out an annuity, the higher the income (annuity rate) you’ll get.

    There are two types of lifetime annuity to choose from:

    • Basic lifetime annuities – where you set your income in advance
    • Investment-linked annuities – where your income rises and falls in line with investment performance but will never fall below a guaranteed minimum.

    Basic lifetime annuities offer a range of income options designed to match different personal circumstances and attitude to risk.

    In most cases, choosing an annuity is a decision that will determine your income for the rest of your life, so it’s extremely important to make the right choice.

    You should discuss your options with a professional financial adviser before choosing an annuity.

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