Pensions and retirement income options have had a lot of media coverage over the last 12 months, since the budget last March.

The flexibility and income, annuity or cash options provided are fantastic. You will shortly have the freedom to use your pension fund as you wish. This is great news if you have other income options and assets to draw from.

The proposed new death benefit rules for pensions may also incentivise you to retain your pension fund for generations? It could be one of the most tax efficient assets to hold on to.

However, the new rules, particularly on the income flexibility, don’t come without additional risk. A major concern now is that some people may outlive their pension fund (and income). Just a few questions for you to consider:

• How long do you expect to live?
• How long do you expect your spouse or partner live?
• What level of income will you need at different periods in your retirement?
• What is your minimum income requirement in retirement?
• How much flexibility will you need to vary your income or access capital?
• What will your investment strategy be to sustain your income?
• How much state pension can you and your spouse/partner expect?
• What other assets do you have to help fund your retirement?
• How tax efficient will you be in retirement?

Yes, the new flexibility is great. Your decisions will be amongst the most important you ever make. Please make sure you take independent financial advice.

 

Steve Speed 16/03/15