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Posts Tagged ‘retirement’

Annuities, do your research, or better still let us do it for you!

Wednesday, September 15th, 2010

What are annuities?

An annuity pays a guaranteed regular income to you for the rest of your life. Most people at retirement will use the money accumulated in pension funds during their working life to buy an annuity.

When you reach retirement there are two main ways in which you can receive an income from your pension fund:

  • Purchase an annuity which will provide a guaranteed regular income for the rest of your life
  • Take an “unsecured pension” which allows you to draw an income from your pension whilst leaving it invested in shares, funds or other assets. This leaves you in control of your pension investments.

However, once you reach the age of 75, you must normally use your pension fund to buy an annuity, even if you opted not to take one immediately or invested in an unsecured pension to start with.

So why do you need to research? When you reach retirement age your pension company will more often than not write to you and offer an annuity and a deadline to decline the offer. This will include various options such as indexation, single or joint life, guarantees etc. Most people who do not fully understand the options available to them will tick the box that has the highest starting income and purchase an annuity which once purchased cannot be changed. 

What you might not know?  Your pension company probably won’t tell you this but, when the time comes to purchase an annuity you can approach other providers and request quotations to see if you can get a better deal. This is called an Open Market Option. Some providers will also take your health into consideration and often smokers will benefit from better annuity rates. You could also take a joint life annuity that will provide some income for your spouse or partner in the event of your death. Rates for these annuities will be slightly less at outset, but will offer income support for your spouse or partner after your death.

Everyone’s circumstances are different and before you make any decision that will affect the amount of money you receive in retirement, or a decision that will compromise the flexibility of your retirement, we would encourage you to seek advice from our pension specialist or your financial adviser.

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Can you afford to retire?

Tuesday, June 1st, 2010

Do you know that to target a retirement income of £20,000 p.a. you would need a pension fund of £300,000? (source FSA Money Made Clear www.fsa.gov.uk/tables/bespoke/Annuities. Based on a 65 yr old non smoking male, single life, no guarantee, standard level annuity.)

This means means that for some of you approaching retirement, the promised age of leisure may be more of a myth than a reality. Without proper planning you may simply not be able to afford to retire.

Retirement is lasting longer, getting more expensive and it’s becoming complicated too. Phasing retirement is becoming increasingly popular. Any pension plan needs to support your lifestyle during accumulation and the retirement phase.

If you would like a review of your pension plan, please contact your financial adviser, or speak to our expert Alan Brown on 0800 435648.

 

Adam Cook
Head of Operations

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Standard Life offer an online reality check!

Tuesday, February 16th, 2010

Give yourself an online reality check

This younger group of customers told Standard Life that they knew they needed a realistic plan for their retirement, and they wanted frank conversations with advisers about their position. Standard Life developed a simple online tool to help them understand their current position, It asks simple questions about their current pensions, salary, how much they can afford to contribute and when they hope to retire, presenting the results in an easily digestible format. Specifically designed for younger clients, this tool might help you save for your retirement.  The website is www.getarealitycheck.co.uk

If you need further help or wish to discuss your options in greater details please contact us.

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Widows Pension Protection Plan – Family Income Benefit

Friday, September 25th, 2009

Under most final salary scheme i.e. teachers, civil service, firemen, local authority workers in the event of death before or after retirement there is a 50% reduction in the pension in payment payable to the spouse for their lifetime.

 

Even on a generous pension of some £30,000 you can see there is an immediate reduction to £15,000 i.e. a loss of £15,000 per annum for the surviving spouse.

 

This means that the plans for retirement can go completely wrong as moving from £30,000 to £15,000 a year is substantial even through there is only one surviving person but their lifestyle would probably go with it.

 

These particular individuals have good income streams and are crying out for their income and lifestyle to be protected.

 

We have a solution to protect your pension to age 75 upon death for your surviving spouse?

 

Using the above example we would nominate a family income benefit of £15,000 per annum (£1250 a month) which would be paid tax free to the surviving spouse on a monthly basis. There will be no need for probate, solicitors or fees involved.

 

This is a very attractive feature as it requires no administration at the time of death. All that is required is a death certificate for prompt payment of benefits.

 

Obviously the earlier one secures life assurance the cheaper the monthly premium is and hence all should be approached but most popular time would be to pick up somebody in their early 50’s to pick up a lower rate for their age and health.  

 

 

Alan Brown – IFA – Pensions Specialist

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Are you getting the best annuity rate, pension or retirement planning?

Thursday, August 27th, 2009

Beware you could lose 40% of your retirement income each year for life!

How?

At age 60 or above you will receive a letter from your pension company. It will ask you to sign and return. DON’T!

Make sure you seek advice from a professional at this point. Don’t just ask your friends or colleagues they may have made the same mistake. Be sure that you understand your retirement options and how these will help you to achieve your retirement goals. Only then will you be in a position to return the letter or make alternative plans to meet your own retirement objectives.

  • Do you know your retirement options?
  • Do you know you don’t have to take the annuity offered by your pension provider?
  • Do you know you don’t have to take an annuity at your normal retirement age?
  • Do you know you may be eligible for an increased annuity income if you smoke or are not in good health?
  • Do you know you can take 25% tax free cash and an income whilst remaining invested in markets up to the age of 75 instead of an immediate annuity?
  • Do you know you can access 25% tax free cash lump sum from your pension at age 50 without taking an income if you are still working and do not require the income?

Speaking to your financial adviser may save you money or increase your income and quality of life in retirement. If you do not seek advice you may miss out on extra income in retirement. If you are 50 or approaching 50 and haven’t yet investigated your retirement options I would urge you to speak to your financial adviser.

Below are some case studies. Source (just retirement)


Eleanor

 

Eleanor, aged 60 is nearly two stone over weight and does little exercise. She has suffered from hypertension (high blood pressure) for ten years and is on prescribed medication. Her condition, where the blood pressure is persistently raised, increases the risk

of stroke, heart attacks, heart failure and kidney disease. With enhanced underwriting based on these conditions and life style, Eleanor can qualify for a 33% enhancement over typical Open Market Option annuity rate.

Scenario is based on a woman aged 60 with a fund value of £40k. Quoted Single Life, monthly in advance, nil guarantee, level and no Value Protection. Correct as at 01/07/09. Typical OMO rate sourced

from The Exchange 01/07/09

+33%

 Ted

 

With a 30-a-day habit, its obvious Ted, aged 60, can get a smoker annuity for which he could get a 20% enhancement over a typical Open Market Option annuity rate. Dig a little deeper and Ted reveals he suffers from emphysema, has been hospitalised in the past, is on daily medication and his daily activities

have been severely reduced. With enhanced underwriting based on these health conditions and lifestyle, Ted’s case could qualify for up to a 40% enhancement over a typical Open

Market Option annuity rate.

Scenario is based on a man aged 60 with a fund value of £40k. Quoted Single Life, monthly in advance, nil guarantee, level and no Value Protection. Correct as

at 01/07/09. Typical OMO rate sourced from The Exchange 01/07/09

+40%

David

 

David is a smoker, averaging 10 cigarettes per day so would qualify for a smoker annuity. On further investigation it was established David is overweight and is also taking prescribed medication for high blood pressure and high cholesterol. With enhanced underwriting based on these health conditions, accompanied by his smoking habit, David’s case could qualify for up to 40% enhancement over a typical Open Market Option annuity rate.

Scenario is based on a man aged 65 with a

fund value of £40k. Quoted Single Life, monthly in advance, nil guarantee, level and no Value Protection. Correct as at 01/07/09. Typical OMO rate sourced from The Exchange 01/07/09

+40%

Contact us now to dicuss your retirement options with an independent financial adviser. Our intial consultation is always free and with no obligation to proceed. Call 0800 435648 between 8am and 6pm Monday to Friday.

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