Phased Retirement

Phased Retirement allows you to control your retirement fund and convert it gradually over a number of years into income. This control is achieved by setting up many contracts (often more than 1,000) and using a number of them each year to provide you with your desired level of income. This income will be made up of part tax-free cash and part annuity. The annuity provides ongoing income for life.

The balance of your pension fund (i.e. the contracts not cashed in or 'crystallized' to provide you with income) continue to be invested, thus providing you with the possibility of higher future income. This will depend mainly upon how much income you take out of the pension fund (especially in the early years) and future investment returns.

Scheme Pension

This will be the only option, without transferring, for members of a Defined Benefit (also known as Final Salary) Pension scheme. These benefits are paid either directly from the original pension scheme or on its behalf by an insurance company. Payments from Defined Benefits Schemes are guaranteed for life, but do not offer the flexible benefits outline in the Pensions Freedom legislation.

Uncrystallised Pension Fund Lump Sum (UFPLS)

From the 6th April 2015, a new type of payment was introduced which allows a lump sum to be paid from an existing Money Purchase pension plan. The amount drawn is up to you, and the amount drawn will allow 25% of the monies to be paid tax free with the remainder subject to your marginal rate of tax.

This piece of legislation is likely to be useful for so called 'Zombie' companies who are no longer open for business e.g. Equitable Life and Phoenix. It ensures that all policy holders enjoy the same pension's freedom even if the particular provider does not want to offer a flexi-access drawdown contract.

Third Way Pensions

These plans fit in between a Lifetime Annuity and a Drawdown Plan as they offer the chance to still participate in stock market growth but with guarantees to either capital or income.

Triviality

The triviality and small pots rules changed from April 2015, making them available for those aged 55. The 'general triviality' combined limit of £30,000 is only available for Defined Benefit (Final Salary) schemes. All such commutations must take place within a single 12 month period from the 'nominated date' and must extinguish all the member's rights under the scheme or annuity.

The small/stranded £10,000 pot rules will continue to be available to both schemes. You can only have 3 small stranded pots payments in your lifetime.

A PENSION IS A LONG TERM INVESTMENT THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND ON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES, AND TAX LEGISLATION