The Vesting Phase

If you are at, or nearing your intended retirement age you need to decide how you are going to take your pension benefits. You need to carefully consider your options, because the choice you make will impact on the income you receive for the rest of your life.

Important factors you should consider are how reliant you will be on your pension income, your life expectancy (which is often underestimated), whether you need to provide an income to your dependents should you pre-decease them, your attitude to risk and your potential Inheritance Tax position. We will discuss these factors with you fully and consider them along with expectations for annuity rates, interest rates, inflation and potential investment returns before making our recommendations to you.

The good news is that you now have many more options available to chose from, however, this can make your decision more difficult. Should you buy a Lifetime Annuity, an Investment-Backed Annuity, a Short-Term or Temporary Annuity, enter Unsecured Pension (USP), Alternatively Secured Pension (ASP) or arrange a Hybrid solution (often referred to as ‘Third Way’ products)?

Not all of these options are suitable for everyone and we fully explain the potential benefits and possible drawbacks to our clients and help them to narrow down the options to those that warrant further consideration, before making recommendations to you as to the most appropriate course of action for your own particular circumstances.

Personal Pension providers will usually write to you before you retire to confirm the pension options that they offer and the amount of pension they will pay you in the form of a Lifetime Annuity. However, they have to offer you an ‘Open Market Option’, which allows you to take pension benefits from an alternative provider. If a Lifetime Annuity is the most suitable option for you, we will compare the annuity terms offered by your existing provider to those available on the open market.






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