Options at retirement

Having successfully built up a pension fund during your working life, there will come a time when you will need to make some important decisions about how to use this fund. These decisions involve how you intend to draw your pension income to ensure the benefits best suit your needs in retirement. It is normal for people who are retiring to convert a portion of their pension fund into a tax-free lump sum with the balance used to purchase an annuity which will be paid for the rest of their life.  If you purchase a joint life annuity with your spouse or partner then this will be paid until the second one of you dies. Annuity rates can vary and you don't have to buy your annuity from the company that's been managing your pension fund.

An alternative to purchasing an annuity is to convert the retirement funds into an income drawdown arrangement or a self invested pension plan. Whichever you choose you can still take a tax free lump sum but the level of income that you choose to receive will be taken from your invested funds.  Until recently it has been compulsory to purchase an annuity or an alternatively secured pension at age 75. In June 2010 the Government announced that the need to purchase an annuity is to be removed.

This is obviously an important and complex area.  Sense can help you to look at the capital that you have built up in pension arrangements and other forms of investments and advise you on how to draw your retirement income from these in a way that matches your ongoing objectives and family circumstances.

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