From the age of 55 you can elect to draw pension benefits from your defined contribution pensions (not final salary). Up to 25% of this can be paid tax-free with the residual balance to be paid as a pension income subject to your marginal rate of Income Tax. In most circumstances, the pension income will either be provided via the purchase of an annuity or via the use of Drawdown (Unsecured Pension).
With legislation introduced in April 2015, Drawdown (Unsecured Pension) offers investors a flexible method by which they can access their pension benefits. With Drawdown, you remain in control of your pension fund, how it is invested and how much you withdraw from it. Should you pass away, your residual pot can be passed to your spouse, who can then continue to receive a pension income, or it can be passed on to your children subject to a tax charge.
Whilst Drawdown can offer uncapped withdrawals, once the pension fund is empty no more retirement benefits can be provided.
It is the “At Retirement” stage where the correct financial advice is vital. Many people are guilty of not paying as much attention as they should to their retirement plans during the “pre-retirement” phase. Post-retirement, this could have serious implications on your annual pension benefits and standard of living. Therefore, the specialist advisers at JFP Financial Services Ltd will guide you through this process via both an initial and ongoing reviews to ensure your pension funds meet your retirement objectives.
To discuss this further, please contact us.