Pensions Key Features

Question 1

Phased Annuity Purchase (8)

Answer 1

• Can choose how much to crystallise to achieve required income.
• Income in early years is mostly PCLS so tax efficient.
• Annuity provides lifetime guaranteed income .
• Include options such as widow’s benefits, annuity protection etc.
• Flexible annuity option can be used to decrease income if required.
• Uncrystallised funds can continue to grow/potential investment growth.
• Any remaining uncrystallised funds available for beneficiaries.
• Tax free if death before 75/IHT free before 2027.

Question 2

Phased FAD (9)

Answer 2

• Can choose how much to crystallise to achieve required income.
• Tax‐efficient income and total control over level of taxable income taken.
• 25% PCLS / 75% to FAD.
• The remainder of fund can remain invested.
• Remaining funds invested to suit ATR.
• Potential investment growth.
• Decision about what to do with remaining funds can be deferred.
• Not locking into an annuity/poor annuity rates/rates may improve.
• Tax free death benefits if death before 75/free of IHT before 2027/flexibility of beneficiary.

Question 3

UFPLS (11)

Answer 3

• Can access as much of pension fund as income needs require.
• Up to 25% tax free / excess taxed as pension income.
• Tax-efficient income.
• Remainder of fund can remain invested.
• Remaining funds invested to suit ATR.
• Potential investment growth.
• Decision about what to do with remaining funds can be deferred.
• Not locking into an annuity/poor annuity rates/rates may improve.
• Simple to understand.
• Useful for tax planning.
• Tax free death benefits if death before 75/free of IHT before 2027/flexibility of beneficiary.