Monday, October 29, 2012

Sponsored post: Annuities aren’t the only option


Many people have lost faith in pensions. They have done so largely the income that can be derived from them is poor and they are faced with a gamble with annuity providers over how long they will live to enjoy the income they are receiving in lieu of the pension fund given up. This statement is true to some extent but it does not take into account that an annuity is only one option for pension income. The other common option is income drawdown. Income drawdown allows for a fund to remain invested while income is received. This has the benefit of the retiree retaining control over the longevity of the fund; on their death it can be passed to a dependent rather than to the coffers of the annuity provider. The situation is further improved where retirees have £20,000 guaranteed income from other sources. In this instance the entire pension fund is available as capital for the pension fund owner to use as they wish rather than being restricted to 25% tax free lump sum and the balance as income.

This blog was written by Andrew Neligan, a Chartered Financial Planner who helps legal professionals achieve their lifestyle goals.

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