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Income in Retirement

In retirement your income from employment or self-employment may be replaced by an income from your pension.

Traditionally, this could be done by using your pension fund to purchase an annuity from an appropriate annuity provider, securing you an income for life, no matter how long you live.

Alternatively, drawdown was an option which was relevant for some investors. This allowed you to take an income from your retirement fund rather than buying an annuity, but due to the risks involved it required specialist advice.

In his 2014 Budget, the Chancellor announced “the most radical changes to pensions in almost a century” which came into effect  from April 2015.

They include:

  • Freedom over how investors take tax-free cash
  • Flexible access to pensions from age 55
  • New restrictions on how much you can contribute to private pensions
  • 55% pension ‘death tax’ to be abolished
  • Retirement ages to increase

The  changes are good news for pension savings in that they remove most of the concerns many people have about the inflexibility of pensions. More flexibility means that advice to ensure that your retirement savings are not exhausted and they meet your needs for life will be more important than before. The right type of advice can make a huge difference and it is important that you make the appropriate choices for your specific circumstances.

The value of an investment will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.