Higher income 'generated by pension transfer'

Brits looking to maximise their income when they come to draw upon their savings in later life may wish to consider seeking pension transfer advice.

New research from Skandia indicated the latest 15 year gilt yield has fallen to 2.25 per cent - which is a new record low.

However, it was noted it remains possible for people to turn this situation to their advantage.

If the entirety of the pension fund is not placed into income drawdown in one go, individuals could choose to wait until the market improves or gilt yields increase.

When this is done, it may be advisable for people in this position to consider their pension transfer options in order to ensure they are taking advantage of the best financial product available to them.

The rest of the retirement fund can then be phased into drawdown to gain a significantly higher income than would have been the case before.

It was noted the decline of gilt will have a negative impact on those who have already finished working and are making use of income withdrawal and annuity in order to fund their living costs.

"When a person reaches retirement, all too often they take their maximum tax-free cash lump sum, which means the entire fund goes into drawdown," commented pension expert for Skandia Adrian Walker.

"They may or may not then take an income with the remaining fund," he continued, adding: "People need to be aware of the advantages keeping a small lump sum in their pension can have when they come to drawing an income from their pension."

Marketing director for AJ Bell Billy MacKay recently warned the fall in gilt yields poses the threat of financial hardship to those who have already worked hard to ensure they are adequately prepared for later life, calling on the government to take action to address the issue.

Ashall Glover Financial Services, pension transfer specialists

Posted by Charles Powell