You have two main options in order to obtain income from your pension fund (excluding the rare animal of final salary schemes) and these are:
1. Purchase an annuity
2. Take income drawdown.
Although annuities have their place because you purchase an income stream for life (and often your spouses life), returns are currently extremely low. However you do have security of income in most cases, however the capital sum is usually lost to your beneficiaries.
We believe that for most people income drawdown can be more suitable, provided it is invested in suitable vehicles. By using our solution, half your pension is invested in our property syndicates without a mortgage and therefore your share of the rent is paid into your pension account without tax deduction.
The other half invests in the dividend paying funds and these are then paid to your pension account as declared by the fund manager.
You then draw an income from your pension pot (within HMRC limits) and your capital remains invested allowing an element of inflation protection. Upon death your spouse can continue with the drawdown. Upon second death your beneficiaries will receive the pension pot as a lump sum, subject to a tax charge. This is obviously quite different to an annuity.
See Pension Feature 1 above for a pension income comparison between an annuity in the current climate and a drawdown using anticipated returns from our investment proposition. Please note that some of our commercial property syndicates are more suitable to pension drawdown than others.
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