Pension Advice on Advisers with Pension Finder

Tax-Free Cash

When your day of retirement finally comes, the first option available to you is to withdraw a lump sum of cash tax-free. It is possible to take out up to one-quarter of your total pension in a single transaction which is also known as the Pension Commencement Lump Sum.

Once upon a time, AVC’s and protected rights pension plans did not allow this lump sum to be withdrawn. There are certain pension plans in existence which still do not allow this arrangement. Check to make sure you current plan gives you this option. If you are withdrawing tax-free cash from occupational schemes such as AVC’s, you may actually be allowed withdraw a higher percentage at once. Do not make any rash financial plans based on potential withdrawals until you have been in touch with the scheme administrator.

It may also be possible to withdraw the tax-free sum and place it into a separate pension plan. The problem with this is that such conduct is frowned upon by the Inland Revenue and is often referred to as cash ‘recycling’. This action could see you hit with a severe tax penalty if it is not allowed by the rules of the pension scheme.

Lifetime Annuity

This is the most popular and least complicated option available to you once the tax-free cash option has been utilized. It is basically a secure and regular form of income that ensures you will receive payments for the rest of your life. This form of annuity has no expiry date so once it is set up, there is no altering it. Likewise, there is no chance of it lapsing and placing you in financial trouble. There are dozens of insurance companies such as Canada Life that provide annuities. It is important to do some research before committing to one company as the rate offered varies from business to business.

The Importance Of The Open Market Option

There is every chance that your pension is currently being handled by a provider that is not giving you the best deal. It would be foolish and potentially devastating to allow yourself to be locked into a deal that could be far less lucrative than other offers. Succumbing to the poor terms offered by your current provider means you are waving the white flag and effectively burning money.

Thanks to the Open Market Option, you have the right to shop around to prevent this from happening. There is absolutely nothing to stop you from looking at dozens of other providers in a bid to find the best deal. In an overwhelming number of cases, usage of the Open Market Option saves people thousands of pounds. Best of all, it’s absolutely free!

In a recent survey carried out between just six of the numerous pension providers around, it was found that there was a £113 difference between the best and worst. Over 25 years this seemingly small amount suddenly becomes a whopping £2825. That is a lot of money to save by doing just half a day’s research. As already mentioned, that survey only covered six providers. Imagine how big the difference is between the very best and very worst pension providers. The difference will probably be enough to buy a car or enjoy a couple of holidays in the sun.

Why Aren’t You Researching Yet?

Hopefully, the above information will scare you into shopping around for the best deal. There are several highly respected independent financial advisors in the UK who have annuity comparisons on their websites. These sites are free to look at and easy to navigate. One successful visit could save you thousands of pounds which will make retirement that little bit more comfortable.

If you haven't found all the answers that you are looking for you can find similar content in the Options At Retirement sections, contact an adviser at the top of the page, or you could try these related posts:

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