There are different ways to use your pension funds at retirement. At Warren & Co, we use our extensive knowledge and experience to advise you on the most suitable option for you.
When you come to open your pension pot, one option is to buy an annuity from an insurance company. In many instances, the annuity offered by the provider you built up your pension pot with will not be the best available. It is crucial to get the best deal you can because this annuity must provide the income that you live on for the rest of your life.
Another option is to keep your fund invested and take a regular income from the pot. This is known as income drawdown. As the rest of your pot remains invested, it will continue to benefit from any investment growth. In either case, you generally take up to 25% of the value of your pension pot as a tax free cash lump sum.
Recent Pension Changes
Since April 2015 you can also withdrawn up to 100% of the pension fund value. The first 25% is usually tax free while the remaining 75% is taxable. However, by taking a taxable lump sum, you could also move into a higher income tax band.