OPTIONS AT RETIREMENT
Finding the best retirement strategy for you
There are many options available to you at retirement, and it can be hard to decide which is right for you
Let our advisers do the hard work for you; we can calculate your income needs and plan how to achieve your goals. You will be provided with clear and straightforward explanations of your retirement options and provisions. We offer a wide range of products:
The St. James’s Place Retirement Account provides a tax-efficient way for individuals to save for retirement. This account offers access to a wide range of funds to help you achieve your goals, whether you are looking for income, growth or a combination of both. The account has the flexibility to provide an income through Flexi-Access Drawdown or Capped Drawdown, provided you have an existing Capped Drawdown pension arrangement to transfer to St. James’s Place. Your adviser can help you decide which is most suitable for your circumstances.
Self-Invested Personal Pension
A Self-Invested Personal Pension (SIPP) offers flexibility and lets you choose where to invest your money. It gives you the option to diversify your investments to spread risk. Like other pensions, the government will still give you up to 45% tax relief on the amount you pay in depending on your taxable income and the amount you contribute to your pension. In the St. James’s Place Retirement Account and most personal pensions, tax relief above the basic rate is claimed via your annual tax return. Investment growth within a SIPP is currently free from all UK Income Tax and Capital Gains Taxes.
SIPPs will not be suitable for everybody and generally only those who are fairly experienced at actively managing their investment should consider this type of investment. The value of a pension can fall as well as rise. You may get back less than the amount invested.
If you are aged 55 or over and do not need a guaranteed income, drawdown can provide a flexible alternative with the potential to continue to increase the size of your retirement pot through investment growth. Subject to having available lifetime allowance, each time you move some of your pension into drawdown, you can take up to 25% as a tax-free lump sum. The remainder stays invested where you choose and can be taken as taxable income as you wish.
Drawdown gives you the option to choose how much you would like to withdraw each year so you can change it to suit your spending needs. When you die, any remaining drawdown fund can be passed on to your nominated beneficiaries in the event of your death, tax free in some cases.
However, there is a risk that you could run out of money if you take too much out, if your investments perform poorly or if you live longer than expected. An adviser can help mitigate these risks by helping you to decide if drawdown is right for you and can discuss using drawdown as part of a combined retirement strategy that could also include an annuity to give you both flexibility and security.
The flexibility of drawdown means that financial advice will be valuable to help protect your retirement savings from being exhausted. The right type of advice can make a big difference and it is important that you make the appropriate choices for your specific circumstances.
Income drawdown will reduce the size of your pension fund and the investment growth may not be sufficient to maintain the level of income you wish to draw. If you withdraw money at a rate greater than the growth achieved by your investments, your remaining fund will reduce in value. Your Financial Adviser will review the level of income you take annually.
The income you receive may be lower than the amount you could receive from an annuity, depending on the performance of your investments.
A lifetime annuity s a secure, regular income which you buy from an insurance company with a lump sum from your pension. It provides you with financial security knowing you will have a guaranteed income throughout your retirement. This option may be suitable for those who wish to minimise risk with their retirement income.
When choosing your annuity you can choose the features that suit your needs. For example:
• Have the income paid to your spouse, partner or other nominee after you die.
• Increase the income yearly.
• Choose when you receive payments.
• Guarantee to have your income paid for a set number of years.
The main disadvantages of an annuity is that this income may be smaller than you could achieve through a different option and you will not have the option of varying your income should you need to. Once you have set up your annuity, it cannot be changed for the rest of your life, so it is important that you consider all of your options and shop around for the best annuity rates.
Some annuities may be more suitable than others for your particular circumstances. Our advisers can help you to determine which is best for you.
Frequently asked questions
Our financial advisers are experienced in taking the time to understand your aims and goals in order to determine which retirement option will suit your circumstances.
Yes, you can take your private pension at age 55 even if you are still working. However, you will not receive your State Pension until age 65 at the earliest.
Subject to having available lifetime allowance, up to 25% of your pension can be taken tax-free, with income tax paid on the remaining 75%. The amount of tax you pay depends on your total income for the year and your tax rate.
Yes. You can start taking your personal pension at age 55 and continue to work full-time or part-time. However, occupational pension schemes may include provisions that affect pension entitlement where employment continues.