At Nicholls Stevens we understand that for many people as they face retirement,they need the security of a fixed income. They want the comfort of knowing that every month a set amount of money will be deposited in their bank account in the same way that the pay cheque arrived each month.
If you have been a member of an occupational pension scheme, when you retire you will receive a fixed income for life, part of which may increase in payment, depending upon the terms of the scheme.
If you have saved up for retirement using a personal pension
A guaranteed income can be provided by:
- A fixed rate annuity- this will provide you with a guaranteed income for life – however, unless it is linked to rpi or a similar index the level of income will not increase and over time the purchasing power of this income will fall. You may be able to select an option which insures that when you die the income continues to your spouse or partner. However, you need to be aware that in most cases on the second death the remaining capital is not returned to your family.
- Sometimes clients need a high level of fixed income for a short period, perhaps bridging the gap until the State Pension is paid. In this case A short term annuity may be the answer. A short term anuity provides a guaranteed income for say 5 years, with the return of a capital sum at the end of the term. At the end of the termit gives you an opportunity to revisit the type of scheme which is most applicable for your need to provide future income.
Nicholls Stevens are able to obtain up to date annuity rates for the type of guarnateed income plan you need. Frequently the figures shown in weekend newspapers are out of date. there are usually four or five Insurance Companies regularly offering competitive rates but they do come in and out of the market depending on their need for this type of business and occassionally an unexpected Company will put in an appearance. We subscribe to a software system which gives us up to date information which we immediately confirm with the Insurance Company
- An enhanced annuity – it may be possible for us to obtain a higher annuity rate if you are in poor health, smoke or live in a particular area of the country
You may have other capital to invest to give you a guaranteed income. The level of income you can secure will of course depend upon interest rates at the time, but a guaranteed income can be achieved from a fixed term Bond account offered by a Bank or Building Society or maybe an Income Bond offered by NS&I savings. If you are to maximise the return from such an investment Nicholls Stevens will advise you on the tax situation. If you are married it may be advantageous to invest in the name of the lower taxpayer and wherever possible to make use of the cash ISA allowance