Annuities

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Annuities

Up until the change in pension rules from 6 April 2006 (A-Day), investors were required by law to start taking their pension no later than age 75. However this rule has been abolished so funds can continue to be accessed after age 75. The chancellor has announced in the 2006 budget however that pension funds that have not been used purchased an annuity may be subject to inheritance tax.

There are now a number of different options available to those wishing to take their pension or coming up to retirement age:

• Trivial pension - for anyone with total pension funds of 1% of the lifetime allowance (£15,000 at 2006/7) or less, it is possible to take the full amount as a cash sum, 25% of which will be tax free.
• Annuity - the fund is used to buy a pension which is guaranteed for life.
• Alternatively Secured Pension (ASP) - similar to an income drawdown but now available to those over 75 not wishing to buy an annuity.
• Income drawdown - now known as unsecured pension. Available to those up to the age of 75 not wishing to buy an annuity.
  
  

Click on the links for more information about these options. The most appropriate choice for any individual however depends on their age, state of health and their financial circumstances and needs. It is a good idea to seek professional financial advice when planning to take retirement benefits as making the right decision will affect income for life and that of any dependents that may be left after death.

Our experts can help you to make the right decision and understand the implications of the significant changes to pensions. To talk to an adviser about your situation, please complete our Quick Enquiry Form and we will arrange for you to be contacted. Alternatively, you can call us on 0845 106 0505.

For many other alternative ways to build up a fund for retirement, visit us at www.Investments.co.uk

Pensions.co.uk is part of a large network of financial sites created to help advise you on life events, such as buying a house, Mortgages.co.uk; insuring your car - CarInsurances.co.uk; your life - LifeInsurance.co.uk; and your home - HomeInsurance.co.uk.

1998 - 2007 UK Pensions - Planning before, at the onset and during retirement.