Are you a Friends Life client who has been notified that you can not get access to your pension to make use of the new pension freedoms? If so, don’t worry, we may be able to help you. Click here to pay a visit to our site www.flexi-access-drawdown.uk or continue reading.
While many individuals are now using the pension freedoms that came into force in April 2015 there are some customers who are having some frustration in getting access to their pension fund to use it how they wish. One such group appear to be consumers of Friends Life who have reversed a decision to provide flexi-access drawdown as a result of the ‘complex nature’ of their pension book of business.
Friends Life have written to customers pointing out that if the customer wishes to gain access to their pension fund they will have three alternatives:
The first is to take their complete pension fund in one go. For many this is not likely to be a reasonable option and could possibly see customers pay significant sums of avoidable income tax to the treasury. While it is certainly possible to take your whole fund as a single payment, it really is improbable that this will be a wise financial decision for the huge majority of customers with a pension fund.
The second option is to take the 25 % tax free lump sum and immediately use the remaining 75% of your fund to purchase an annuity. Let’s repeat that — an annuity!!! Nothing wrong with annuities but wasn’t the Chancellor ‘clear‘ the whole purpose of pension freedoms was that ‘No one ever needs to buy an annuity again‘? Many individuals at age 55 may just wish to take their tax free cash to pay off a mortgage or other liability. If in order to accomplish this they are obliged to buy an annuity (a guaranteed income for life) some 10 years or more before they really need it, then they are going to get a much lower annuity rate and again pay needless tax.
The third choice is to transfer their pension fund to an alternative provider. Our opinion is that of the three alternatives offered to Friends Life consumers who intend to access their pension fund, this is most likely to be the better solution. Our provider offers customers full flexibility within the new rules and enables clients to use their pension fund as they wish. A customer can simply take their tax free cash and keep the balance invested until they retire – at that stage they could leave the product without penalty and buy an annuity if they wish. Alternatively they can take an income at a higher level than obtainable from an annuity, in fact there are so many various ways a customer can use their pension it is impracticable to mention them all here. We work with our customers all the while they are with us helping them manage their fund and hopefully growing it– although growth can not be guaranteed and pension funds can go down as well as up.
If you would like a free no obligation flexi-access-drawdown quote or have any questions you would like answered then visit our flexi-access-drawdown website or call us on 020 33 55 4827