You may wish to consider converting your pension into an annuity if you are approaching retirement age. Your insurance company will offer to buy your pension plan from you and in exchange they will provide you with an income for life. The advantage of an annuity is that you are effectively buying a protected income stream which is guaranteed for life.
There is an inflationary risk to the buying power of your annuity income over time but you are not subject to the ups and downs of the stockmarket and you know exactly where you stand. When you buy your annuity you can opt for capital protection so in the event of your dealth within the guarantee period a sum of money would be paid back to your estate. This provides peace of mind that in the event of your untimely death the insurance company will not benefit completely. Of course there is a cost to protection and this will be reflected in the annuity income at outset which will be lower.
If you need an income from your pension fund and you don't want to commit to an annuity purchase then another option is pension drawdown. Pension drawdown allows you to keep control of your pension fund but the income you recieve is not protected and you are vulnerable to potential stockmarket fluctuations.
You should shop around to compare annuity plans to find the best quote - use our service below:
Important Risk Information:
This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.
Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.