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How much do you know about your Pension?

Most people are surprised to find that they know very little about their pensions behavior in retirement. For example:

When you retire you will have no option other than to purchase an annuity. This is fine except annuity rates have been falling steadily for some time.

If you purchase a ʻsingle life annuityʼ (just you) you will NOT be able to leave any of your pension pot or pension income to your spouse/ next of kin.

If you do purchase a ʻjoint life annuityʼ (you and your spouse), only 50% of your annual retirement income will be passed to your spouse.

The ʻjoint life annuityʼ also provides a lower annual income than a ʻsingle life annuityʼ.

After the ʻjoint life annuityʼ has been passed to your spouse it can NOT be passed any further. Nothing can be left to your next of kin.

The benefit to an Annuity is an ongoing income no matter how long you live even if you can not pass it on. However if you were to die early on in your retirement the insurance company retain all remaining pension money which can be very profitable for them.

At anytime after 55 you can start taking an income from your SIPP wether you have retired or not.

There are various options to withdraw an income including Income Withdrawal, Drawdown, Pension Income Drawdown and Phased Retirement.

Within these options you have the option to take cash lump sums and ongoing income.

Drawdown for example derives an income from the total value of your pension pot and normally tracks a little higher than the equivalent income from an Annuity purchase of the same value.

The investments within your SIPP will continue to grow maintaining your pension pot and hopefully increasing your ongoing income.

What happens when I die? One of the main benefits of a SIPP is the ability to pass on your pension to your spouse or children. The assets within your SIPP are liquidated with the total value passed

Future Retirement Planning do not offer any financial advice and information is published solely to help clients make their own investment decisions. It does not constitute a recommendation in any way whatsoever. Should you have any doubt as to the suitability of an investment for your circumstances you should contact your Independent Financial Advisor.

So why is a SIPP different?

Future Retirement Planning Ltd


Standard Pension

SIPP

Do you receive a monthly statement?

Can you choose where your pension is invested?

Do you have options at retirement to help continue to build your pension?

Can you pass your retirement income on to your spouse?

Can you pass your retirement income onto your children?

Do you have to purchase an Annuity at retirement? Can you start taking your retirement income from 55?

Can you control all fees deducted from your pension?

Can you take a cash lump sum at 55?

Are you able to use your pension to buy commercial property?

At retirement you must use your pension pot to purchase an Annuity.

SIPPʼs give you various options allowing you to take income as well as continue to build your pension fund.

Only if arranged Prior to retirement then 50% of your income can be passed to your spouse but this will produce a lower annual income.

A SIPP can handed on to your spouse as a lump sum minus 35% tax.

Annuities can not be passed on to children. The insurance company keeps any remaining money after you die.

A SIPP can handed down to your children as a lump sum minus 35% tax.

Only if your pension allows you to. ✖

An annual statement provided by your pension provider will not show the fees charged to your fund.

Future Retirement Planning do not offer any financial advice and information is published solely to help clients make their own investment decisions. It does not constitute a recommendation in any way whatsoever. Should you have any doubt as to the suitability of an investment for your circumstances you should contact your Independent Financial Advisor.

Fees can not be deducted from your SIPP unless previously approved by you. All SIPP administrator charges are clear from the start. ✔

Only if your pension allows you to. ✖

A SIPP can start giving you a retirement income at any time after 55.

All SIPPʼs allow a cash lump sum. ✔

Future Retirement Planning Ltd

Future Retirement planning  

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