Turn Down The First Offer

I almost made the mistake of a lifetime, my friend Sheena told me.

Several days ago, I received a call from my pension provider. He told me that as of the present, my pension plan has matured enough for me to be able to avail of an annuity. He gave me information about it and gave me an offer of annuity.

Being rather unfamiliar about pension annuities and such, I proceeded to agree to the offer, not knowing any better. Then another call came and I put the pension provider on hold.

The person who called was a friend who happened to be a professional annuity adviser. As the conversation with my friend ended, I suddenly remembered his profession and so I asked him some advice regarding this. The first thing he told me was: “Turn down whatever offer the pension provider gives. You’ll regret it for rest of your retirement life.”

He proceeded to give a succinct explanation of why I should turn it down and that I should first shop around for other annuities before making an annuity purchase.  When I got back to the pension provider, I followed my friend’s advice and did not accept the offer. Following this event, I asked for more professional advice and learned more about the mechanics of pension annuities.

Coincidence? Definitely. But it saved my retirement life forever.

Advantages of Scheme Pension

Scheme Pension is an alternative way to take an income (pension drawdown is an other) and is based on a client’s individual circumstances. It offers the potential for taking a higher income in certain situations because it is not restricted by HMRC limits.

Scheme Pension can be utilised at any time to provide income after age 50 (55 from 2010).

An actuary will determine the maximum income that can be withdrawn based on the client’s age, mortality and fund `value. In many situations (although not all), this will allow a larger income to be taken. This can be particularly useful for people with a shortened life expectancy, allowing them to take more money out of their fund whilst they are alive and make ‘Gifts out of Income’ if required.
(As long as HMRC rules for ‘Gifts out of Income’ are met, the gifted money is not liable for inheritance tax when the client dies i.e. the 7 year rule does not apply.)

A client has two choices at outset as to how his Scheme Pension is established and these are as follows:

1. A predetermined term of 10 years. If the member dies within the ten year period, the remaining pension installments can continue to be paid and taxed as income, assuming that there are sufficient pension funds to continue the payments. The scheme pensionwill be reviewed every 3 years.
Or

2. A Scheme pension reviewable every 3 years by the scheme actuary until death, assuming that there are sufficient pension funds to continue the payments.

Careful management and regular reviews should result in maximum income and minimum fund left on death.
For specialist retirement planning advice including annuities, income drawdown, scheme pension and advice on an equity release sceheme
Call us on 0800 043 0725 or visit our retirement solutions website www.retirementsolutions.co.uk