Pension freedoms EasyFacts 1

When it’s time to take your retirement benefits, the first step towards maximising your pension potential is to understand what you can do with your pension pot. And that’s where the pension freedoms come in – your flexible options for taking defined contribution (DC) pensions as retirement income.

We’re the experts

Here at Pension Potential, we’re experts on the pension freedoms. We’re here to help you not just understand, but get the best from, those savings you’ve worked so hard to build up.

Ask for a free, no-obligation Pension Potential pack showing your personalised options for taking your pension savings.

Download your pack from the Pension Potential hub

Your FREE Pack

But first … a warning

If you’re looking at options for taking your benefits, this could make you more vulnerable to pension scammers who will try and get you to transfer your pension savings to them. They may promise high returns and ‘unmissable’ opportunities – but don’t be fooled. Check out the ScamSmart website to understand the warning signs and keep your savings safe.

Your retirement income choices

Annuity

Guaranteed income (annuity)

You use your pension savings to buy an insurance policy that pays you an income (either for the rest of your life or a fixed period).
Drawdown

Flexible income (drawdown)

Your pension savings stay invested and you take retirement income out in a way that suits your needs.
Cash

Cash

You turn some or all of your pension savings into cash.
Mix your options

Mix your options

You combine two or more of the pension freedoms - for example, start with flexible income (drawdown) and buy a guaranteed income (annuity) later.

Guaranteed income (annuity)

You use your pension savings to buy an insurance policy that pays you an income (either for the rest of your life or a fixed period).

Flexible income (drawdown)

Your pension savings stay invested and you take retirement income out in a way that suits your needs.

Cash

You turn some or all of your pension savings into cash.

Mix your options

You combine two or more of the pension freedoms - for example, start with flexible income (drawdown) and buy a guaranteed income (annuity) later.

Tax-free potential

All these retirement income choices come with optional tax-free cash – normally up to a quarter of your pension pot. Better still, this tax-free cash doesn’t affect your personal income tax allowance (the amount of income you can have before starting to pay tax). The standard personal income tax allowance is currently £12,570 a year.

But – think about your long-term needs.

Tax-free cash is optional. You don’t have to take it – it’s simply a choice that’s available. If you do take it, remember your remaining retirement income will be smaller.

Read about how we helped Teresa get the income she wanted by taking tax-free cash and making the most of her income tax allowance.

What kind of pension?

It’s important to understand that the flexible options we’re talking about here are only available for defined contribution (DC) pensions (that build up from contributions and investment). They don’t apply to defined benefit (DB) pensions (sometimes called final salary pensions), that promise you a set level of yearly pension income based on:

part of your salary, and
how long you built up benefits in the scheme.

But this isn’t a bad thing, because DB pensions are valuable in their own right. They offer a regular income, for the rest of your life, that usually increases over time.

We can help you maximise your potential

Pension Potential offers expert guidance and lots of support to help you understand more about your retirement options.

We don’t offer financial advice through Pension Potential. But, if you decide you need financial advice, we can refer you to our expert financial planners who offer this service.

Guidance

Guidance is intended to help you understand your retirement options. It won’t make specific recommendations or tell you what you should do.

Personal insight gives you a personalised overview of the options available to you, but won’t recommend which option would be best for you.
Tailored insight enables you to use our annuity finder to search the market and buy an annuity. Any fees will be paid by commission from the annuity provider.
Expert insight offers the option of talking to an expert who will give you help and guidance, but won’t be able to recommend specific options unless you decide to take, and pay for, financial advice. They can discuss this with you.

Financial advice

Financial advice is a regulated professional service that will take your situation into account and make recommendations for options and products.

You may need financial advice if you’re interested in more complicated retirement options such as flexible income (drawdown), or mixing two or more retirement options.

You’ll need to pay for financial advice. We offer financial advice from highly-qualified chartered financial planners, with competitive charges.

We’ll always tell you in advance if there’s a charge for any guidance or advice you take from us.

Are you ready to maximise your pension potential?

Personal insight

Go to our Pension Potential hub to get a free retirement pack with personal insights just for you.
Tailored insight

If guaranteed income (annuity) appeals to you, use the Pension Potential annuity finder to shop around for your own tailored annuity.
Expert insight

Once you’ve looked into your options, ask for a call with one of our friendly retirement experts.

Pension freedoms EasyFacts 1

We’re the experts

But first … a warning