If you have reached the magic age of 55, you can draw your pension benefits from a private pension in a number of different ways. These include the following:
• you can use all the pension fund to buy an income guaranteed for life (annuity);
• you can take 25% of the pension fund and use the remainder to buy an annuity;
• you can take 25% of the fund tax-free and leave the remainder invested with the option to draw
out a regular income or lump sums as you wish;
• you can cash in the whole pension, receiving 25% free of tax, and the remainder taxed as if you had earned it in that tax year.
Note: Other than the 25% you can take tax-free, all other income or lump sums you take will be subject to tax, so it is very important to take advice on the tax you have to pay.
There are pros and cons for all of these choices. Do give us a ring if you would like to go over your options.
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