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What are the best options for me to secure the highest level of income from my three pension plans

Client Circumstances

  • Mr Jones is aged 65, married and has a preexisting health problem.
  • Mrs Jones is aged 62 and in good health
  • Mr Jones has three personal pension plans with a total fund value of £95,000 from which he now wishes to take his retirement benefits
  • He wishes to take the maximum Pension Commencement Lump Sum (PCLS) available to provide further income
  • He has an income shortfall of £2,500 net per annum
  • Mr Jones has little investment financial knowledge
  • He already has an adequate cash reserve for emergencies

Recommended Solutions

  • Elect to take the maximum PCLS representing 25% of the £95,000 pension fund – ie 25% x £95,000 = £23,750
  • An Impaired Life annuity secured on the life of Mr Jones taking into account his life expectancy on the remaining fund
  • Annuity to increase each year and provide an annuity payable to Mrs Jones in the event of Mr Jones’ death
  • Invest the £23,750 with an appropriate risk strategy to provide a net income to meet any shortfall
  • Tax efficient investments arranged using ISA allowances etc

Benefits from advice given

  • A higher level of annuity payable from an impaired life annuity
  • Simplified process of using one annuity provider instead of three
  • Income shortfall met from the combination of an impaired life annuity and tax efficient investments
  • Peace of mind for Mr Jones that his income requirement can be met
  • Peace of mind for Mr Jones that his wife’s future income position is secured in the event of his death

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This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.

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