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Annuity

Annuity

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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Future Servicing

We will look to carry out a regular review of your circumstances, objectives, needs and portfolio performance to ensure all arrangements continue to be suitable and advise of any changes that may be appropriate.

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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