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Many people like to retire gradually, without giving up work altogether.
Phased retirement (or staggered vesting) is where you can take part of your pension and continue to work. It can offer a flexible approach to commencing and withdrawing pension benefits.
Staggered vesting can be made available to those who transfer from retirement annuities or some form of occupational scheme to a personal pension plan.
By allowing regular withdrawals from the pension fund, Phased Retirement plans achieve a level of flexibility. Your annual pension income is made up of tax-free cash and an annuity or suitable drawdown arrangement. The balance of the fund then remains invested.
Please note depending on your circumstances, annuity or drawdown income may be taxable.
There are many other potentially complex issues to consider when using a phased approach to your retirement. Financial Advice from an appropriately qualified adviser is essential.
A pension is a long-term investment, the fund may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
By transferring your occupational pension scheme benefits into a personal arrangement, you may be giving up rights to guaranteed benefits, which are known levels of pension income and increases that will be applied in the future.