Independent Retirement Planning Advisors

Independent Retirement Planning Advisors

Retirement is one of the most important moments in most people’s lives. It should also be one of the happiest. However, before getting there, there is a minefield of decisions to take and we believe it is best to do this with the assistance of a qualified professional who is experienced in the issues and pitfalls.

Some of the things to consider when planning for retirement are:

  • Should you take tax-free cash or not?
  • Should you buy an annuity or keep your pension invested in an income drawdown or "third-way" scheme?
  • If you take an annuity, what about spouse’s benefits, guarantee periods and allowing for inflation?
  • If you take an annuity, the rate offered by your pension provider is unlikely to be the most competitive.
  • How do you legitimately minimise income tax in retirement?
  • Can you make use of capital gains tax exemptions in retirement?
  • What about the retirement income tax trap for people whose retirement income is higher than about £27,000?

Income Drawdown

An option that many people haven't heard of is called income drawdown. This should be at least considered by all but the most cautious investors with, say, more than £100,000 in their pension pot at retirement. This allows their pension funds to remain invested and to draw a pension that can vary between limits defined by the government. Potential advantages of this arrangement are:

  • You would keep control of the pension, the amount drawn and the investments.
  • The pension funds can remain invested in assets that could provide better long-term returns than those of an annuity.
  • This allows significantly more flexibility than an annuity and is especially important for people who might want to retire in phases.
  • The death benefits in many cases would be better.

A recent budget announcement indicates that withdrawals from drawdown schemes could be unlimited from 2015, subject of course to income tax.

Third Way

There are also "third-way" retirement options which act like income drawdown but would underpin the arrangement with certain guarantees that your capital and/or your income would not reduce, whilst allowing you to take advantage of any growth in the investments. This type of pension is very popular in the USA and Japan and we have seen this form of retirement planning grow in the UK in recent years.

It is all too easy to end up with a retirement arrangement that is less than the best simply by not being aware of the options available and how to avoid the pitfalls. It is vital to consult a capable independent financial advisor at the point of retirement. The Abbott Clarke Partnership has Chartered Firm status, the highest designation given by the Chartered Insurance Institute to financial advisor companies. We can guide you through these options to develop the most appropriate, tax-effective solution.

For more information, call us on 01494 461221 (High Wycombe, Buckinghamshire) or Email: peter.clarke@acpifa.co.uk

The Abbott Clarke Partnership Ltd is authorised and regulated by the Financial Conduct Authority and entered on the FCA register (www.fca.org.uk/register) under reference 564807

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