Comparing Annuity And Retirement Options

Comparing Annuity and Retirement Options

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  Welcome to The Complete Pension Guide 2017!

For – setting up a new pension, reviewing your pension, approaching retirement, looking into auto enrolment, and buying your annuity or entering income drawdown

Annuities: Immediate Vesting Personal Pension Plan (IVPPP) – Compulsory Purchase Annuity (CPA) – Purchased Life Annuity (PLA)

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Comparing Annuity and Retirement Options

Annuity Retirement OptionsThere are five main pension options in total:

We will quickly run over the options that each provides.

Tax-Free Cash

For Lifetime Annuities, Income Drawdown and Investment Linked Annuities you must take your cash the moment your pension comes available.

With Phased Retirement, you can withdraw a certain amount of tax-free cash every time funds are realised.

An Alternatively Secured Pension does not offer the option of withdrawing tax-free cash at any time.

Income Security

Your income is only secure with regular Lifetime Annuities. With all the other options, your income could fall as well as rise.

 Tax On Income

All five options are taxed at source under Pay As You Earn (PAYE).


  • Ÿ  Lifetime Annuity – Once you set it up, it cannot be altered
  • Ÿ  Investment Linked Annuity – The income of this annuity will vary despite the fact the annuity type is fixed. You will have the option to change funds or switch to a regular annuity
  • Ÿ  Phased Retirement – Every time funds are vested, you can choose another type of annuity. However, you cannot change these annuities once they have been purchased
  • Ÿ  Income Drawdown – There is a maximum income limit on this form of investment. You can purchase lifetime annuities at any age with the option to switch to an Alternatively Secured Pension available once you turn 75
  • Ÿ  Alternatively Secured Pension – You will receive variable levels of income though there are maximum and minimum limits with a lifetime annuity purchasable at any time

 Choice Of Investments

There is no investment choice with a Lifetime Annuity.

With an Investment Linked Annuity, you will be forced to choose between your provider’s funds.

With the other three options, it is possible to invest in any number of funds.


The Lifetime Annuity is the only option where no reviews are needed.

Flexible Death Benefits

Only the Phased Retirement and Income Drawdown options allow for flexible death benefits.

All of the above information is based on the most recent data available. It is subject to change with personal circumstances dictating tax benefits.