Personal Pension Options
Firstly, what constitutes a Personal Pension Plan (PPP)? The primary aim here is simply to transform your hard earned money into a steady influx of financial support throughout your retirement for the future.
Thankfully, in 2006, a government revision of pension law allowed an appreciative simplification of the various options available to you. Originally, you were able to claim your money from the age of 50; however, under new government legislation as of April 2010, this has since increased to 55. Of course, depending on individual circumstances, candidates undergoing serious ill-health can often make a claim for their pension sooner than this, but do check with your pension administrator on your scheme’s particular rules.
To help you on your way, here is a list of the five common annuity categories available:
1. Level – You receive an identical income each year
2. Increasing – Your yearly income is increased through a fixed rate, or at the rate of inflation
3. Investment-linked – The amount received from your annuity provider is determined through investment returns. These are built upon the performance of a fund managed by the annuity provider
4. Joint-life – Your partner receives an income if you die before them
5. Enhanced – Illnesses that affect life expectancy are considered and a higher rate is received accordingly
Unsecured Pensions and Alternatively Secured Pensions
The other available choices involve avoiding an annuity, if so desired. If this is the case, you have the option of withdrawing directly from within your pension fund, but of course this will be tax-deductable. This can either be done as an ‘unsecured pension’ or as an ‘alternatively secured pension’. These two are very similar, but the difference lies in the amount that can be drawn, the ‘alternatively secured pension’ has lower limits.
If you have a smaller pension fund, it is possible to claim every penny as a cash lump sum, with 25% of that sum being tax-free.
It is very important to remember that only advisers authorised by the Financial Services Authority (FSA) can offer you pensions advice.