ARE YOU SURE? Following the introduction of new pension rules on 6 April 2015, there are now more options than ever before for using the money you have built up in your pension. The decision about what to do with your savings is entirely yours, but the consequences of your decision could affect your income for the rest of your life. That’s why our industry regulator, the Financial Conduct Authority, requires us to give you the information you need to help you decide whether Taking Tax Free Cash and Income by Flexi-access Drawdown is appropriate for your circumstances. The purpose of this leaflet is to summarise the relevant pros and cons and let you know where you can find further important information. It’s important to shop around rather than settling for your own pension provider’s products without checking if they provide the best deal for you. In some cases you will have to choose another provider. For example, Old Mutual Wealth does not provide annuities. You can find guidance on how to shop around in the Money Advice Service document ‘Your pension: it’s time to choose’. This is available on the money advice service website or we can send you a copy. TAKING TAX FREE CASH AND INCOME BY FLEXI-ACCESS DRAWDOWN WHAT YOUR REQUEST INVOLVES • Using some, or all, of your pension savings to provide tax-free cash (normally 25% of the amount involved) and unrestricted income withdrawals, while the rest of your pension savings can remain invested. • Non UK Tax – If you are subject to tax in any country outside the UK, please contact your tax specialist, to understand whether you will be liable for tax in that country. ADVANTAGES • The returns from your invested savings can provide an income that increases over time, although this is not guaranteed. • This is a flexible retirement income solution that makes it possible for you to transfer some or all of your remaining savings to other retirement income solutions in the future. DISADVANTAGES • If your investment returns do not perform as well as you expect, or if you withdraw too much income, your pension could run out of money, possibly leaving you and any dependants you may have at that stage reliant on the state pension. • Investment requires regular monitoring to offset the previous disadvantage. • There are no guarantees on investment performance or income. • If you do not take account of the effects of inflation on your planned income withdrawals, their true value and buying power could reduce over time. • Taking income through flexi-access drawdown means that any future pension contributions you may want to make are restricted to £4,000 a tax year. • Your income withdrawals will be subject to income tax. Taking too much income could mean you move into a higher tax band. (See the accompanying document: ‘Taking tax into account’.) • The income you withdraw could have a detrimental effect on any means-tested state benefits you are receiving e.g. housing benefit or pensions credit. More information about this is available at: https://www.gov.uk/government/publications/pension-flexibilities-and-dwp-benefits
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ARE YOU SURE?Following the introduction of new pension rules on 6 April 2015, there are now more options than ever before for using the money you have built up in your pension.
The decision about what to do with your savings is entirely yours, but the consequences of your decision could affect your income for the rest of your life. That’s why our industry regulator, the Financial Conduct Authority, requires us to give you the information you need to help you decide whether Taking Tax Free Cash and Income by Flexi-access Drawdown is appropriate for your circumstances.
The purpose of this leaflet is to summarise the relevant pros and cons and let you know where you can find further important information.
It’s important to shop around rather than settling for your own pension provider’s products without checking if they provide the best deal for you. In some cases you will have to choose another provider. For example, Old Mutual Wealth does not provide annuities. You can find guidance on how to shop around in the Money Advice Service document ‘Your pension: it’s time to choose’. This is available on the money advice service website or we can send you a copy.
Taking Tax Free Cash and inCome by FlExi-AccESS DRAwDOwn
whAt YOUR REqUESt invOlvES• Using some, or all, of your pension savings to provide tax-free cash (normally 25% of the amount involved) and unrestricted income
withdrawals, while the rest of your pension savings can remain invested.• non UK tax – if you are subject to tax in any country outside the UK, please contact your tax specialist,
to understand whether you will be liable for tax in that country.
ADvAntAgES• The returns from your invested savings can provide an income that increases over time, although this is not guaranteed.• This is a flexible retirement income solution that makes it possible for you to transfer some or all of your remaining savings to other
retirement income solutions in the future.
DiSADvAntAgES• if your investment returns do not perform as well as you expect, or if you withdraw too much income, your pension could run out of
money, possibly leaving you and any dependants you may have at that stage reliant on the state pension.• investment requires regular monitoring to offset the previous disadvantage. • There are no guarantees on investment performance or income.• if you do not take account of the effects of inflation on your planned income withdrawals, their true value and buying power could
reduce over time. • taking income through flexi-access drawdown means that any future pension contributions you may
want to make are restricted to £4,000 a tax year.• your income withdrawals will be subject to income tax. Taking too much income could mean you move into a higher tax band. (see
the accompanying document: ‘Taking tax into account’.)• The income you withdraw could have a detrimental effect on any means-tested state benefits you are receiving e.g. housing benefit
or pensions credit. more information about this is available at: https://www.gov.uk/government/publications/pension-flexibilities-and-dwp-benefits
www.oldmutualwealth.co.ukCalls may be monitored and recorded for training purposes and to avoid misunderstandings.
old mutual Wealth is the trading name of old mutual Wealth Limited which provides an individual savings account (isa) and Collective investment account (Cia) and old mutual Wealth Life & Pensions Limited which provides a Collective retirement account (Cra) and Collective investment bond (Cib).
old mutual Wealth Limited and old mutual Wealth Life & Pensions Limited are registered in england and Wales under numbers 1680071 and 4163431 respectively. registered office at old mutual house, Portland Terrace, southampton so14 7eJ, United kingdom.
old mutual Wealth Limited is authorised and regulated by the Financial Conduct authority. old mutual Wealth Life & Pensions Limited is authorised by the Prudential regulation authority and regulated by the Financial Conduct authority and the Prudential regulation authority. Their Financial services register numbers are 165359 and 207977 respectively.
VaT number 386 1301 59.
sk11059/217-1194/december 2017
POSSiblE AltERnAtivES • Using some or all of your pension savings to buy a guaranteed lifetime income in the form of an annuity
• Taking what you need from your pension savings as a series of lump sums or regular monthly income, with 25% of each withdrawal tax-free
• Use other savings/investments to meet your immediate income needs
• reconsider whether you need to take this action at this time
OthER cOnSiDERAtiOnS • if you do not take your tax-free cash entitlement as a lump sum when you start income drawdown you
cannot do so later. (Tax free cash is usually 25% of the pension savings being used to provide flexi-access drawdown.)
• different providers offer different income drawdown products, with different charging structures. it can pay to shop around for the drawdown product with charges that best suit the way you intend to use income drawdown. Using a financial adviser to help you do this is likely to save you money.
whERE tO gO FOR ADvicE AnD gUiDAncE • because the decisions you make now will influence your retirement income for the rest of your life, we recommend that you
discuss your retirement plans with your Financial adviser. if you do not have a Financial adviser you can find one at www.oldmutualwealth.co.uk/find-an-adviser
• at the very least you should take advantage of the government’s free Pension Wise guidance service which is accessible at www.pensionwise.gov.uk
ADDitiOnAl inFORmAtiOn AvAilAblE FROm OlD mUtUAl wEAlth• you can also visit www.oldmutualwealth.co.uk/pensions2015 to find further support, including: – Factsheets on alternative withdrawal options – new choices – new retirement opportunities - a guide to the pension reforms and the new options available to you. – Full details about tax on pension withdrawals is available in our reference document: ‘a guide to income tax and your pension’.
The decision is yours: This factsheet is designed to help you decide whether Taking Tax Free Cash and Income by Flexi-access Drawdown is appropriate to your personal circumstances and is your best course of action. it is not intended to provide you with advice as to the action you should be taking.
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