Some pensions provided by the Civil Service, Local Authorities and some large companies do not require you to shop around when you retire as they will provide your tax-free cash sum and your pension income.

However most people have their own Personal Pensions or are a member of a Group Personal Pension Plan through their employer. In these circumstances you must transfer the policies at retirement into either an annuity or a flexi-access drawdown policy, to enable you to take your pension benefits.

Both options provide you with a tax-free lump sum of 25% of your total fund value.

Annuity

1. This option is generally the safer option and will provide you with a guaranteed monthly income whilst you are still alive and will not run out.
2. Annuities are generally provided by large insurance companies i.e. Aviva, Canada Life, Scottish Widows and your annuity is protected by the Financial Services Compensation Scheme in the unlikely event of your annuity provider going bankrupt.
3. Annuities can offer various different income options as follows:-

1. An income payable to your widow or widower in the event of your death, either at the same level or a reduced level, i.e. 50%.
2. The income can remain level or could increase by inflation i.e. index-linked.
3. Can be payable for a guaranteed period i.e. 10 years, which means that in the event of your early death the pension will continue to be paid for the rest of the guaranteed period, if you are still alive after the guaranteed period has expired then the pension will carry on until your death.
4. Higher levels of income can be provided for those individuals with certain medical conditions or if they smoke cigarettes.

Flexi-access Drawdown

1. Introduced in 2015 to provide people with more pension freedom.
2. As the name suggests this option is extremely flexible and you can choose the monthly income you need to suit your requirements.
3. Your pension fund will stay invested and the value will go up and down depending on the performance of your investments, similar to the pension policies you paid into prior to retirement.
4. It is possible if you take too much income that the pension fund will run out and your income will stop.
5. If at the date of your death there is still money left in this policy then it can be passed to your dependents.
6. It is possible to transfer your flexi-access drawdown policy into an annuity but not vice-versa.

Costs

We would charge you 1.5% of the fund value after tax-free cash is taken, for example if your fund value was worth £100,000 after you had taken tax-free cash then our charge to set up flexi-access drawdown or an annuity would be £1,500, which is normally paid by the insurance company setting up the policy, from your pension fund.

For flexi-access drawdown policies we charge an additional 0.5% of the fund value each year to cover the cost of ongoing reviews and any ad-hoc advice that may be required, this charge does not apply to annuities as no ongoing reviews are required.

Procedures

1. We would normally arrange an initial meeting at our office or at your home if easier, to enable us to complete our questionnaire and obtain details of your various pension policies. We will also discuss which retirement option is most suitable for you.
2. We would then send you letters of authority for you to sign which will enable us to deal with your pension providers direct to obtain the information and paperwork that is needed.
3. We will then shop around for the most competitive flexi-access drawdown policy or annuity satisfying your requirements, all of your existing pension policies will be transferred to one flexi-access drawdown policy or one annuity.
4. Once the above work is completed we will prepare a recommendation report confirming who the pension provider is and why.
5. We will arrange a final meeting to discuss our report and to complete the pension paperwork, normally tax-free cash sums are paid around one month after the paperwork is completed and the pension income will start in around two months, however in the meantime we will keep you updated with progress.