Category: Retirement Planning

Pension Annuities

Couple41864515A pension annuity provides a regular income which will be paid for the rest of your life, in exchange for a cash lump sum.

Usually, you will be able to take up to 25% of the total amount as a tax-free lump sum, although some plans will allow you to take a higher level of tax-free cash. Whatever the level of tax-free cash you take, remember than the more you take, the lower your income will be.

Who can purchase an annuity?

Many people use a pension annuity to provide them with their retirement income. There are three main types of pension:

  1. State Pension: payable to those who are entitled and over the state pension age.
  2. Company Pension: set up through your employment, where payments are made by yourself, your employer or both. With company pensions, there are final salary schemes (calculated on your salary and years of service) and ‘money purchase’ (involving an investment similar to a private pension).
  3. Private Pension: set up by individuals with a bank, building society or insurance company, where funds are invested on your behalf.

If you have a private pension or ‘money purchase’ company pension, you can use a pension annuity to convert the funds you have built up into a regular income which is paid for the rest of your life, tailored to your circumstances.

Your open market option

When you’re coming up to retirement, your pension provider(s) will write to advise you of your fund value(s) and tell you how much income you would receive from them. However, the annuity offered may not be competitive, and you may be able to get a bigger retirement income from a different provider.

The ‘open market option’ is your right to shopping around to make sure you get the best possible deal for your future pension – allowing you to buy a conventional annuity from any provider on the market. It is extremely important to shop around to ensure that you get the most retirement income possible, especially as annuity rates have fallen to record lows in recent years.

Only one chance!

Buying the right pension is extremely important as, once bought, they cannot be changed to a different type of annuity or altered in any way.

Shopping around to find the best annuity rates can be extremely time consuming, but you can get a broker to do all the hard work for you.

You should choose a broker that searches the whole annuity market and will check to see if you qualify for enhanced rates due to your health or lifestyle conditions.

Changes in the March 2014 Budget: The Chancellor proposed that from April 2015 pension investors who have reached 55 should be able to take the whole of their pension as cash. The first 25% should be tax free, whilst they will have to pay tax on the rest, but only at their highest marginal rate. This is subject to consultation but could make a great difference to your retirement.

Why not contact Key Retirement Solutions if you need further help or advice.

Key Retirement Solutions



Category: Pensions/Annuities, Retirement Planning Tags:

Wills and Lasting Powers of Attorney (LPA’s)

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Wills and Lasting Powers of Attorney (LPAs) form an essential element of estate planning as they can enable you to plan for what happens now and in the future.

Why make a Will?

If you die without making a valid Will, the government will decide who inherits your possessions, property and money (your estate), according to the Laws of Intestacy. Through application of these laws, your spouse may end up sharing your wealth with your children or parents – if you and your partner are unmarried, it will certainly mean that your partner gets nothing from your estate. In the case of separation without a divorce, your estranged spouse would still inherit from your estate.

Not having a valid Will can also lead to a lengthy, and costly, probate process, which can be an incredibly difficult experience for your loved-ones at an extremely painful time. Many solicitors will agree that they make far more money from picking up the pieces from badly written ‘D.I.Y.’ Wills than they would have done if the Will had been put together by a qualified Will Writer. Although they may seem like the cheaper alternative to paying for a Will, in many cases it is the relatives who end up footing the bill for ‘D.I.Y.’ Wills further down the line.

Although putting your Last Will and Testament together may sound quite daunting, our specialists at Key Wills will be able to take you through the process at your own pace, ensuring your Will meets with your specific circumstances and requirements.

What is an LPA?

A Lasting Power of Attorney (LPA) is an in-depth legal document which gives the person or persons of your choice the power to deal with your affairs, if you are unable to do so, on a temporary or permanent basis. These trusted people will then become your attorneys and will be able to use the documents to act on your behalf and carry out your wishes, when necessary. There are two types of LPAs which deal with entirely different aspects of your life:  one your property and affairs, the other your health and personal welfare.

Without an LPA, your loved ones may find themselves powerless to help you in a situation where you need it most.

A common misconception about LPAs is that they are solely for elderly people with dementia, but this isn’t accurate. By acting now and putting LPAs in place, you are ensuring that those whom you trust are well-placed to act in your best interests as and when they need to. By “waiting until something happens,” you could place your family in a traumatic and costly situation as it may be too late to apply for a Lasting Power of Attorney when it is needed.

In this situation, your loved-ones’ only alternative is to apply to the Court of Protection for permission to deal with your affairs. This is both a lengthy and costly process, which could still deny your loved ones the ability to act wholly within your best interests as the Court may impose restrictions upon them. In some cases the Court may choose a professional person to act on your behalf, instead of your loved-ones, meaning a total stranger would be managing your affairs.

If you would like more advice contact

Keys Retirement Solutions

Category: Wills & LPA Tags: , ,