Most people take tax free cash as they see this is as a good way of building cash funds in retirement. There are a couple of issues however that need consideration:
1. If you really do not need the cash and want to buy an annuity then it is essential to compare taking a full pension annuity with taking tax free cash and buying a purchased life annuity. The tax treatment of these annuities is different and taking tax free cash and buying a purchased life annuity can bring about an increase to after tax income. A good adviser will be able to do the calulations.
2. If you are in a final salary scheme look at the lost income as a result of taking the tax free cash. This can be significant and when turmned into an annuity rate can look very good value. The way to compare is on a cash flowbasis and again a good adviser will be able to do this.
As with everything – learn and be sure to investigate the options.
Annuity Direct Website
Its getting a bit close to the deadline, but would it not be sensible to mention the change in dates for personal pension retirement? (And to a lesser extent the extra years buy-back changes also due in April)
Comment by Tim — March 23, 2010 @ 4:38 pm |
Allow it
Comment by annuitybob — March 23, 2010 @ 4:56 pm |