As an alternative to purchasing an annuity at retirement it is now possible to draw out an income directly from a pension fund.
This has the particular advantage that the pension funds remains invested. This gives flexibility to take different levels of
income as a client’s circumstances change.
Income withdrawal is particularly important for those who do not wish to buy an annuity for example, this might include
those clients who:
- are in poor health
- have spouses in poor health
- have a substantially younger spouse
- wish to optimise their Inheritance Tax planning
- have other temporary income such as consultancy earnings
Tax free cash
(Pension Commencement Lump Sum)
A lump sum can now be taken from a pension scheme without commitment to take any significant income. This is of major benefit to those who want to access up to 25% of their pension fund for a capital project but do not need to receive retirement income, for example those who are still working. This issue is complex and needs individual consultation.