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Phased Annuity

Phased Annuity

I intend to gradually retire over the next five years and I want to have the flexibility to increase my income as required.

Client Circumstances

  • Mr Brookes is aged 60, married and in good health.
  • Mrs Brookes is aged 57 and in good health.
  • Mr Brookes has three personal pension funds with a total fund value of £400,000.
  • Mr Brookes has an initial income shortfall requirement of £3,600 net per annum which he wishes to increase over the next five years.
  • Mr Brookes intends to retire fully in five years time.
  • Mr Brookes has little investment financial knowledge.
  • He already has an adequate cash reserve for emergencies

Recommended Solutions

  • Consolidate all three pension plans into one phased annuity arrangement.
  • Crystallise sufficient “segments” to meet the initial required income shortfall via a combination of tax-free lump sum and annuity purchase.
  • Each year identify the income shortfall to be met and again crystallise sufficient segments to achieve the desired level of income.
  • Look to encash all remaining segments in five years time when Mr Brookes fully retires.

Benefits from advice given

  • Simplification of existing pension arrangements by consolidating existing pension plans into one retirement plan.
  • Flexibility to meet the desired retirement income required each year.
  • To ensure maximum tax efficiency by electing to only receive what income is necessary.
  • Ability to generate additional income in the future as and when required.
  • Protect the financial well-being of Mrs Brookes now and in the future.

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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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