Nicholls Stevens specialise in giving retirement advice and every year more and more clients are approaching us to help them with the dilemma of selecting an Insurance Company to accept an open market option
When you are within three months of your stated retirement date, the Insurance Company will usually write to you with some figures and a great deal of paperwork. The figures show the pension and tax free cash sum that the Insurance Company will give you but eh Insurance Company is obliged to disclose that you have an option to move your pension fund to another Insurance Company if they can offer you a better deal – this is called an Open Market Option
What does this mean?
This means that you have the option to buy your annuity from an alternative Insurance Company if they offer more favourable terms
What should I do?
You need to seek advice from an independent adviser such as Nicholls Stevens who can make a search of the market and find a company who will offer better terms. This is not always possible particularly if your policy includes a Guaranteed Annuity Option. If you ave a Guaranteed Annuity Option available within your plan in most cases it is not a good idea to move the fund
Better terms may be possible if your health is poor
If your health is poor it may be possible to obtain better rates. We ask you to fill out just one form and we can ask a number of Insurance Companies to quote us terms. Obtaining better terms may also be possible if you smoke or live in a particular part of the country
Decisions we will help you make
It is important that you select the right type of pension, you will need to consider if you need a pension which continues to your partner should you die first. We will discuss this with you based on your own and your partner’s other sources of income
You will need to consider if you need a pension which increases in payment. ‘such a pension will start at a lower level but has the advantage of keeping pace with inflation. this is “nice to have” but for many people it is not an opton because they need as high a pension as possible at the outset
You will need to consider if you should take the tax free cash sum. This depends on your circumstances, some people need to finish paying of the mortgage, buy a new car or make sure that they have an emergency fund for retirment. The decision is different for each person. At Nicholls Stevens we will give you the advice based on your personal circumstances
How does it work?
Once you have made your decision about the type of pension you require and we have has found the best rates appropriate to your personal circumstances, you will complete paperwork and we will deal with the Insurance Companies on your behalf and handle the transfer.
The transfers may take some time but we will keep them trcked and you need to be aware that sometimes theannuity rate may change while the transfer is taking place.
In due course the tax free cash will be paid to you by cheque or into a bank account of your choice and the pension will be set up to be paid to you monthly. The pension will be paid net of tax. Occassionally the Insurance Company will put you on to an emergency coding and too much tax will be taken in the first few months but this will be resolved and you should not be out of pocket