In the last week we have had a number of providers reduce rates – often by as much as 1%. One provider has commented that Gilt yields have fallen as the UK becomes a safe haven from the Euro. At the same time stock markets have fallen and with them pension fund values. The question for those retiring is what to do? There are a number of options:
1. Defer retirement in the hope that markets will rise again soon. There is a cost to deferring, which is the income lost and so deferring for a long time ususally does not pay.
2. Phase retirement by cashing in a small part of your fund to enable you to live on the tax free cash and income whilst leaving the rest of the fund invested. You need to fully understand the risks involved in this route but it is an option.
3. For those who can afford to take a risk with retirement income there are annuities linked to the stock market or of course unsecured pension. These should not be entered into without a full understanding that income can fall.
Most important thing is to seek specialist adviice and understand the risks associated with any course of action.
Annuity Direct Website
