![]() "High-quality financial advice is vital when constructing such solutions to ensure each customer is comfortable they have the right balance of risk and flexibility that is right for them in order to enjoy the retirement they want," he added. ![]() “The idea of mixing annuity and drawdown solutions customised to an individual’s preference is not new, but the recent interest rate changes and stock market volatility has highlighted the importance of considering annuities as a way of underpinning a retirement income."ĭespite these benefits, Stevens warned that this is not an option a customer can typically navigate on their own. “Blended annuity and drawdown portfolios are a way of balancing the trade-off between controlling a retirement portfolio to benefit from future investment growth while reducing the effects of market volatility. It means leaving your pension money invested, and taking cash as and when you need it. They want to enjoy a certain level of income while retaining control over how they run their retirement funds but at the same time minimising the risk of a market crash causing them to run out of money in retirement. Once all or part of your pension pot is in drawdown, you can choose how and when to take a retirement income from the drawdown fund. Drawdown is one of the options for taking your pension when you reach retirement. LV= retirement director, David Stevens, stated: “Drawdown customers often want the best of both worlds. The company argued that this approach also offers flexibility to advisers and their clients, as advisers can tailor a retirement portfolio for their clients that produces the required amount of guaranteed income and potential for future growth. However, LV= suggested that a blended retirement portfolio combining a fixed term annuity and a smoothed investment fund could help retirees avoid running out of money in retirement and addresses their concerns about stock market volatility. Subject to certain conditions, you can transfer your pension fund to a Pension Drawdown Contract and withdraw an unrestricted amount i.e., up to 100 of the. In addition to this, over a third (37 per cent) of workers with a DC pension said that their preference would be to receive both a set income and have a pot of money to draw from in retirement, increasing to 47 per cent amongst those close to retirement (55-64). The survey also found that over half (54 per cent) of workers with a defined contribution (DC) pension, around 7 million workers, are made anxious by fluctuations in the value of their pension. We’re not authorised to give you advice, but you can read more about your guidance and advice options on our website.Industry experts have suggested that a blended retirement portfolio could ease pensioners' drawdown and volatility fears, after research from LV= found that 58 per cent of working adults, 19 million savers, do not know how to avoid running out of money in retirement. More about your different options for taking your pension savings » First, take your 25 tax-free cash lump sum before you turn 75. But you could use any remaining money to transfer to a guaranteed income (an annuity) later on. To make sure you can pass on your pension in a tax-efficient manner, there are a few things to do. There’s a risk you could run out of money to live on in your retirement, if you take too much money out early on. ![]() This is known as a money purchase annual allowance (MPAA). Once you’ve received the first flexi-access drawdown income payment from your flexi-access drawdown account, this can trigger a lower annual allowance of £10,000.Any money taken is added to your income for the year and taxed in the normal way. As your money remains invested, the value might rise and fall, depending on how your investments perform. Capped drawdown is a type of pension that allows you to withdraw money from your pension pot while keeping it invested.With drawdown, you can usually take up to 25 of your pension pot as tax-free cash and leave the rest invested to provide a regular income and occasional lump sums if required. Then each time you take money out of that account you may pay tax on the full amount of each lump sum. Income drawdown (sometimes called pension drawdown) is where you leave your pension invested and take regular payments from your pot over time. ![]() Under HMRC rules, if you are taking 25% Tax-free cash, for every £1 you take as tax-free cash, £3 is moved to a flexi-access drawdown account that we set up for you.
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