Here is my article which appeared in the Llanelli Star on 14th August 2013:
I am nearing retirement and have a personal pension that I started many years ago. I have received lots of paperwork from my pension company. I want to make sure that I make the correct choice when I apply for my pension income, but there seems to be many options available. I am worried that I will make the wrong decision, which could affect my income for the rest of my life.
We’d all like to think that we’ll have a level of income that will really let us enjoy our retirement. However, with the cost of living rising all the time, it’s more important than ever to consider all the options available, to help you get the most out of your retirement income – and your retired life.
When you retire, you’ll be able to access your pension savings. You can usually take a tax-free cash lump sum of up to 25% of the pension fund. Meanwhile, the rest is often used to buy a pension annuity, designed to give you a stable, guaranteed income for the rest of your life.
What you might not know is that you don’t have to take your pension annuity from the same company that you’ve been saving your pension with. The ‘Open Market Option’ means that everyone can shop around all the pension annuity providers in the market to get the best possible income in retirement. There are sometimes significant differences between the incomes that pension annuity providers will offer you.
Some providers may give you a higher income if you have certain medical conditions, such as diabetes and high blood pressure, and lifestyle factors such as smoking. The difference between the best and worst incomes offered to you as a pension annuity could be considerable – so it’s worth speaking to an Independent Financial Adviser so that you can help you get the most suitable solution for your individual circumstances.
It’s also worth remembering that with most pension annuities, once you have made your decision you can’t normally change your mind and move your savings elsewhere.