#Best drawdown pension how to

The employer’s role solely is to select the scheme provider, decide if there should be any restrictions on fund choices and take contributions from the employee’s pay and forward them with employer contributions to the pension provider.Ī private pension arrangement or personal pension is taken out by a sole-trader or self-employed worker. This is a generic term for pensions that are not workplace schemes.Įmployer-sponsored schemes – each member has a personal pension plan, and their contract is with the pension provider. This type of pension is becoming less frequent. Providing the company is still in existence, there is no investment risk for the pension receiver. It will be based on either the Final Salary or Average Career Salary of the employee. These offer the promise of a guaranteed pension at retirement which reflects the length of service with an employer. This will be a reflection of contributions made and investment growth. There are no guarantees as to what pension will be provided.

They can be personal pensions or Occupational Pensions. These are ‘Pot of Money’ pensions where the benefits provided take into account the value of the fund at retirement. If you have (or have had) a pension that is described below then we can potentially carry-out a Pension HealthCheck. Or, to find out more about Pension Works, click here. To get free, independent financial advice on income drawdown, contact us today on 08. Have a look at our resources on Pension Drawdown here – or, even better, get in touch with one of our team. However, you need to research this carefully as part of your retirement plans. Many people are attracted by the freedom to withdraw as much as you like and when you like, and for the potential for the investment to keep growing throughout retirement. Pension drawdown is increasingly popular these days. If you are comfortable with a higher risk investment, then this is your decision (although we recommend talking through high risk investments with an independent financial adviser who is authorised and regulated by the financial conduct authority like us at Pension Works). Like other investments, a personal pension can be invested in different funds. As our guide to pension drawdown explains, you need to make sure your money is invested in a way you are comfortable with. This means that if your pension performance takes a downturn, it could shrink rather than grow – and the worst-case situation is that you will run out of money. However, the value of any investment can go down as well as up. This is potentially good news, as your pension fund could grow. Unlike an annuity, with pension drawdown your funds remain invested. Although an annuity might suit some people ( see our blog for what to think about), it doesn’t offer you the advantages of drawdown. Finally, it’s worth remembering that some old pension policies may not offer drawdown – the only option is to buy an annuity. A popular reason for this is convenience, as it is much easier to keep track of your pension performance and funds available to you if you only have a single pension fund to monitor. If you have multiple pensions you could consider pension consolidation. You may need to phone up in order to make a pension withdrawal, making the process inconvenient and time-consuming. How do you withdraw?Īs so many of us manage our money online, it may be surprising to learn that some pension providers do not offer online withdrawal.

The lower the fee, the more money for you. If you are planning to make lots of small withdrawals, then the fees could quickly add up. Your pension provider will have charged a management fee as you held a personal pension with them, and once you retire it they could charge you to withdraw! Different providers charge different amounts for pension withdrawal, and this can add up to a significant chunk of your investment funds.

Pension fees are probably the most frustrating part when looking at drawdown and flexi-access drawdown. Here are three key questions to consider, to help you decide whether your current pension provider is best for you. However, your current pension provider may not be offering you the best drawdown deal – and this could be costing you money.

#Best drawdown pension how to

Once you approach retirement age, a key decision to make is how to make use of your pension income drawdown. Shop around before you drawdown: your current pension provider might not be your best option.