Flexible Pension

Unsecured Pensions (USP) provides an alternative to purchasing an annuity by allowing the individual to draw an income directly from the pension fund, which remains invested in a tax efficient environment.

Income is subject to limits set by the Government’s Actuaries Department (GAD) and is broadly based on single life annuity rates. There is no minimum requirement to draw an income before age 75. Once established, the GAD limits are reviewed every five years until age 75 and will depend on the fund value and prevailing annuity rates.

Benefits of unsecured pensions include greater flexibility to alter the level of income each year, whilst retaining control over the investment of the pension fund. For example you could take your tax free cash and not an income straight away.

Should you die before purchasing an annuity,  an unsecured pension will also provide a number of options to your beneficiaries after your death.

This greater flexibility, however, comes at a price and in particular there is the ongoing investment and annuity risk, which could mean that future income could fall and may be lower than could have been secured from an annuity at outset.

Rolling temporary annuities are also available, combined with the ongoing investment of an unsecured pension plan.

Phased Retirement is a method of taking benefits by staggering the retirement lump sum and income over a number of years. This is often achieved by transferring the pension funds to a Phased Retirement Plan, which is made up of typically 1000 individual pension plan segments .

A Phased Retirement plan provides a great deal of flexibility as to how many of the ‘segments’ are used to provide benefits at any one time, and can be used in conjunction with either an annuity and/or unsecured pension plan.

Alternatively secured pension (ASP) - On your 75th birthday, if you haven’t bought an annuity, another option is to use an alternatively secured pension. This works in a similar way to unsecured pensions but has different limits and rules governing the amount of income you can drawdown and death benefits.