When you reach retirement there are three main ways in which you can receive an income from your pension fund:
You will also receive income from your state pension and you may have additional sources of income from savings and investments or property rental.
Annuities An annuity pays a guaranteed regular income to you for the rest of your life, which is taxable in line with current income tax rates.
The money to purchase an annuity will usually come from the pension fund which you have built up with money paid in by you and your employer over your working life. There are also products available now that offer some of the benefits of both an annuity and a drawdown pension, such as a fixed term annuity. You should speak to your financial adviser about their suitability for your needs. If you don't have one, the website Unbiased.co.uk can help you find a professional local to you.
You can shop around for the best income You should always ensure that you exercise your right to shop around for the best deal on your annuity. By using the Open Market Option to shop around - considering annuity rates from providers other than your pension company - you could receive an increase to the income you will receive for the rest of your life.
Be sure to ensure you disclose all your medical history Some providers, such as ourselves, take your health and lifestyle conditions into account and may be able to offer enhanced annuities that could pay even more income if you qualify. Just Retirement is one of the market leaders in enhanced annuities* and has helped over 100,000 people gain more income in retirement.
Consider equity tied up in your home Equity release is becoming an option many people are now considering to supplement their retirement income. Just Retirement is one of the leading providers of equity release** - try our equity release calculator to see what it could mean for you.
Using your savings You may have saved money using a variety of financial products and these need to be considered when thinking about your retirement. Having other savings may mean that you aren’t necessarily totally reliant on your pension and the income it generates when you retire.
Apart from pensions, your savings could include:
All these forms of saving for your retirement need to be considered and can be used to help provide additional funds for you to benefit from in your retirement.
Obtain financial advice As everyone’s circumstances are different, and before you make any decisions, we strongly encourage you to seek personal advice from a financial adviser. If you don't have one, the website Unbiased.co.uk can help you find a professional local to you.
* Source: ABI and Towers Watson - Annuity market share Full year 2012
** Source: Equity Release Council - Equity release market share Full year 2012
Useful links Finding out what the state providesMaking the most of your savingsWorking in retirementDeferring your retirement
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