Beginners' Guides
If you intend to ease yourself into retirement gradually, then you might want to consider phasing your retirement. On a regular basis, usually annually, you can use part of your pension pot to provide a taxable income, or take a tax-free cash lump sum and reduced income.
Your income can be provided either by buying an annuity, or by income drawdown.
The part of your pension pot not used to provide an income (and tax-free cash) remains invested with your pension provider. If you die before you’ve taken all your pension pot, the remainder can be used to provide a lump sum death benefit to your beneficiaries. Alternatively, it can be used to provide a taxable income for your dependants.
You have to use the remaining value of your pension pot to provide an income by the time you reach 75.
Before you Am I intending to give up work all at once or gradually cut down my working hours?
Do I have other income, for example from savings, to supplement my pension income?
Am I willing to take the risk that my overall income could be less through phased retirement than by taking it in one go via an annuity and cash lump sum?
Do I want to manage my pension fund and the income I receive?
Do I want to be able to leave a lump sum death benefit to my family should I die before the phasing is complete?
Is my pension pot big enough to allow me to phase my retirement? The minimum fund size is typically £100,000.
You should always take financial advice before making any decisions about how to take your retirement income.
Another option you could look at is to take out an equity release scheme which could possibly top up the amount you receive.
As part of the Lloyds TSB Group, Scottish Widows is proud to be an Official Provider of the London 2012 Olympic and Paralympic Games.
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