Find out about your pensions income today!
If you have one or more personal, stakeholder or workplace money purchase pensions and are looking to find out much pensions income they will produce there are a number of things to consider.
You’ll have a choice to make about how to get an income from your pension when you retire.
The most straightforward way to get an income is to use the money in your pension fund to buy a lifetime annuity. This is where you swap the money from your pension fund to give you an income in retirement. A lifetime annuity will pay you a pensions income until you die.
Also it is possible to purchase your pensions income in the form of a fixed-term annuity. This is a way of receiving an income for a set period (usually 5 -10 years) and then at the end of the contact you will receive a guaranteed amount of your original fund back. The guaranteed amount is set out when you start the process. This enables you to then buy a lifetime annuity at a later date. This form of pensions income can be very beneficial for people currently in good health and for times when lifetime annuity rates are low.
However, it is also possible to leave some of your pension fund invested and take only part of it as income. You can either:
- draw money from the pension fund itself to give you an income. This is sometimes called income withdrawal or pensions drawdown or
- use some of the money from the pension fund to buy a series of short-term annuities to give you an income.
If you would like to find out how your pension or pensions are performing or for a detailed look at how much pensions income you may receive in retirement, please contact us.
Also the HMRC website is a great place to learn more on the taxation of pensions income – http://www.hmrc.gov.uk/pensioners/pension.htm
