What on earth are ‘QROPS’? A ‘QROPS’ (Qualified Recognised Overseas Pension Scheme) is a relatively new concept. It is a scheme that has been approved by the HMRC and can be advantageous for people retiring abroad. A list of qualifying schemes can be found here: A QROPS is a pension scheme set up outside the [...]
Private pensions Part 2: Tax Free Cash
Should I take the tax free cash sum? The tax free cash is a very popular option. You can use it in a number of ways. Some people put it aside as ‘rainy day’ money to cover unexpected expenditure. Others use it to pay off the mortgage or credit cards. When can I take the [...]
Private pensions Part 5: What other annuities are there?
Most people will buy a conventional annuity that provides a fixed or increasing income for the rest of their life. There are alternative annuity products that provide an income for life, but they usually involve some degree of investment risk. In other words, your income may fall in value. If you’re happy to take some [...]
Private pensions Part 1: What do I do with my pensions savings?
Your pension savings could be very significant. That means it’s important to make the right decisions. What are my ‘pension savings’? These are the savings you have made over the years in pension plans. Most people will have built up their pension savings through schemes run by the companies they’ve worked for, but some people [...]
Private Pensions Part 8: Trivial Pensions – Can I take my entire pension as cash?
If the total value of all your pension fund savings are below a certain level you can take the whole amount as cash. Only 25% of it is tax free, but this is still an attractive option for many people. However, bear in mind you still need money to live on in retirement, so you [...]
Private pensions Part 6: Making the right choices
The second stage in our three step process is to select the features you want. There are a few decisions you have to make, but these are relatively straightforward. Let’s start by identifying the areas you need to consider.These are: What happens on your death? You can protect your family in the event of your death. [...]
Private pensions Part 4: What type of annuity should I buy?
Most people buy a conventional annuity. These are the most popular annuities by a country mile. A conventional annuity pays a guaranteed income for life that can never fall below the amount payable initially. In other words, you will receive the same income for the rest of your life…(figures in this post updated in March 2013)
Alternative Solutions: Scheme Pensions
A made-to-measure pension Scheme pension is really only suitable for those with funds large enough to carry investment risk. Scheme pension is a bespoke arrangement. It’s a little like buying a made-to-measure suit. The amount of income you receive is based on your particular circumstances: your age and your health. These factors contribute to an [...]
Alternative Solutions: Flexible Annuities
A flexible approach to retirement These products can be bought with your pension fund at any time after age 55. They are effectively a form of investment linked annuity. That means your money can be invested in a mix of assets including equities. You can usually convert your fund into a conventional lifetime annuity at [...]
Alternative Solutions: Variable Annuities
When is an annuity not an annuity? The answer is when it’s called a variable annuity. These products originated in the US, but don’t really qualify as an annuity in the UK. Nevertheless, these products can provide a guaranteed income for life just like an annuity. They also allow you to invest some of your [...]
Private Pensions Part 9: Alternative Solutions
Most people buy a lifetime annuity at the point they retire, but there are alternatives. Many of these offer greater flexibility than conventional annuities.
Alternative Solutions: How drawdown works
Drawdown allows you to take an income while leaving your pensions savings invested. Commonly, drawdown funds will be invested in a combination of equities, fixed interest investments (bonds and gilts, for example) and cash. Your income is commonly generated either by keeping an amount equal to the income you want to withdraw each year in [...]
Private pensions Part 3: Buying an Annuity
How do I turn my pension savings into an income? This is one of the most important decisions you will make. But don’t worry. We’ll help you understand your options clearly and simply. Boost your income in retirement The first point to remember is that you don’t have to accept the income offered by the [...]
Private Pension Part 7: Consolidation
Bringing all your pension pots together If you have more than one pension pot it can make sense to bring all the different pots together into one larger pension pot. Most companies will allow you to do this, so you can generally choose which insurance company you’d like to provide all your benefits. The process [...]
Alternative Solutions: Fixed Term Annuities
These products aren’t, strictly speaking, annuities. They pay a fixed or increasing income, but only for a limited number of years – not for life. Often, they are sold for periods of 5 or 10 years. At the end of the fixed period, an amount of money is payable (called the ‘maturity value’). You can [...]