How flexible is your Pension…? (Case Study)

James Rixon All, Pension Leave a Comment

Mr D is reducing his hours at work from 5 days to 3 and needs to top up his income from his pension savings, with a view to increasing the income drawn down when he retires fully in 5 years. He contacted us with questions on the options open to him. He does not wish to use annuities as this will mean “fixing” his pension income now and would mean that he would receive more taxable annual income than he needs right now. He is also aware of the very low annuity rates being offered currently especially to those who are in good health.
He has 3 children, in very different financial situations and he would ideally like his pension pot to outlast him, if possible, in order to benefit both his wife and his children.
We looked carefully at the options available to Mr D and were able to recommend a suitable Income Drawdown provider where funds are carefully managed to match the client’s attitude to risk. Using an online research tool, we were able to demonstrate what levels of income should be sustainable for the longer term, whilst making allowances for adjustments to be made at key points . For example, it is possible to reduce the income being taken from the Drawdown contract when Mr D’s State pension kicks in. He and his wife want to pay for a big family holiday for their Ruby wedding celebrations and this contingency is also built into the forecasts.
Mr D is now happy that he will be able to take benefits for his retirement whilst also having the opportunity of retaining capital for his family and the flexibility of the contract means that changes can be made at any stage, should circumstances alter.

The value of pension investments can go down as well as up and you may get back less than you invested
Taking income or withdrawals in excess of fund growth may result in the fund running out quicker than expected
A pension is a long term investment and inflation will reduce how much your income is worth over the years
Professional financial advice should be sought before taking any action and no action should be taken based solely on this case study.

If you would like any help regarding your Pension, please call us on 01903 882007 or contact us via the contact form.

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