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Getting
more for your money!
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Pension fund withdrawal is a way
of taking money directly from your pension fund rather
than purchasing an annuity. It's an attractive option
at the moment because annuity rates are so low, having
fallen to around 5% from more than 8.5% five years ago.
Higher income
Many pensioners choose to use pension fund withdrawal
in the hope that rates will eventually rise, so that
they can eventually purchase an annuity paying a higher
level of income. Policyholders are allowed to take a
percentage between set limits from their pension fund
each year to use as an income. Although the pension
fund reduces each year by the amount withdrawn, the
hope is that with good investing, the amount will increase
through future growth.
Special rules
If you opt for pension fund withdrawal rather than buying
an annuity, the pension fund remains invested under
special pension fund withdrawal rules. And because the
fund is still invested in potentially higher-risk areas,
any future market corrections could affect the value
of the future pension fund. As a general rule, the minimum
pension fund level you should consider when taking advantage
of pension fund withdrawal is around £100,000.
Another benefit of using pension fund withdrawal is
that, if you were to die, the fund would be passed to
your estate. With an annuity, unless it is a joint annuity
with your spouse, the benefits die with you.
To investigate whether pension fund withdrawal could
be appropriate for your situation, please e-mail
or contact
us for further information. |
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| Levels and
bases of, and reliefs from, taxations are subject
to change. Tax reliefs referred to are those currently
applying and their value depends on the circumstances
of the individual investor and fund in which the
investor participates. |
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