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INDEPENDENT FINANCIAL ADVICE CENTRE
You should remember that past performance is not necessarily a guide to the future. Market and currency movements may cause the value of units, and the value derived from them, to fall as well as rise and you may get back less than you invested when you decide to sell your units. The tax treatment of investments and pensions is not guaranteed and may change in the future.
Your home is at risk if you do not keep up the payments on a mortgage
BUT, taking cash will reduce your Annuity income permanently. The invested lump sum could fall in value and/or the income stop or reduce. If you have got a lot of capital/savings already do you need more? If you come from a family that lives to a very old age might you not be better off with a higher increasing Annuity?
Want some cash or income but not all of it then consider: -
• PHASING
It may be possible to split your pension fund in segments, a bit like an Orange really. Instead of buying an Annuity with the whole Orange, sorry pension fund, you only take the PCLS and Annuity from a few segments. Your remaining segments stay invested and a few are used every year to maintain your income
As the PCLS is taken each year it is also a good method of reducing your income tax liability. You can also vary the type of Annuity you buy each year. There are advantages and drawbacks from the delay but you can stop phasing at any time by taking all the remaining PCLS and buying the Annuity you want.
Whilst phasing, in the event of your demise the remaining pension fund can quite often pass tax efficiently to your partner and/or Family to secure their future.
• Enhanced Life Annuities (ill health smoker etc)
Some Annuity Companies will pay a higher income to those people whose life expectancy is shorter than the average.
If you or your partner “qualify” as an enhanced life think very carefully. If you are the impaired life take the PCLS if you can then consider the maximum income for your partner if you have one. If your partner is the impaired life will they need income if you die first? It may be better to Phase or Drawdown (see later) rather than take the full Annuity immediately; the benefits to either of you in the event of a death could be much higher.
? take the PCLS (tax free cash) Yes/No
? Do I need to Phase in my Annuity
? Am I or my partner an Impaired Life yes/no
Annuity Purchase
