The way you access your pension savings has undergone one of the biggest and most exciting overhauls to UK pensions for a century, but with more choice available than ever before, it can be confusing understanding the various pension-income options available.
A guaranteed income for the rest of your life, regardless of how long you live. The amount you receive will depend on a number of choices, such as whether you want the income to remain the same or increase over time, and whether you want some/all of the income to continue for a spouse or partner after your death.
One of the most flexible ways to access your pension savings and manage your tax bill. It offers a solution for those who want to keep on-going flexibility to potentially select an alternative pension-income option in the future. Plus as your savings remain invested, there is the potential for continued growth in value.1
A guaranteed income for a period of between 3 and 25 years through a non-advised service (or up to 40 years via a Financial Advisor). You can choose the level of income you receive and will know how much you’ll have left at the end of your chosen term to choose another pension-income option should you wish, however it is not possible to know how much income that will secure for you in the future.
Access your pension savings by taking some/all of your fund as a cash lump sum or a series of withdrawals from your existing pension provider. However bear in mind that while typically 25% of any sum taken will be tax-free, the remaining 75% will be taxed as income at your marginal rate, meaning you could pay as much as 40% tax or maybe even more.
Whilst more choice and greater flexibility is positive news, it’s never been more important to understand your choices to make sure you find the best income option for you.
The Government’s independent Pension Wise website (www.pensionwise.gov.uk) can be a useful read before making any decisions regarding your pension income options.