Thinking about early retirement scheme

After the tax free cash has been paid, the individual must decide what to do with the balance to the fund so as to produce an income for life.

The remaining fund may be used to buy a lifetime pension to provide revenue for what's left of the scheme member’s life. Alternatively, depending on the provider offering the option, it's actually possible to capital-protect the annuity so that, if the annuitant dies (since 6 April 2011 this does not have to be before the age of 75), the balance due (allowance purchase cost less payments received before death) gets sent back to the annuitant’s beneficiaries. This will be subjected to a 55 per cent tax charge.

In order to provide choice and competition, money-purchase arrangements must supply an open-market option. This implies that the fund need not be used to purchase an allowance from the plan provider but can instead be used to buy an annuity from another provider offering an improved rate or a more suitable kind of Allowance options

There are a considerable number of options to start to think about when obtaining an annuity. Single life or joint life? Is the allowance to be on the person's life only or is it to include a better half/partner. Many people will want to make provision for a better half/partner, and a joint life annuity will continue to pay out till both parties have died. A joint life pension will provide less revenue than a single life pension, and can mostly be prepared to pay a surviving partner between 50 percent and 100 percent of the annuitant’s 1st income.

An annuity is one sort of product that may be used to produce earnings in retirement.

Other options include earnings drawdown which is sometimes used as an early retirement scheme for those that are simply looking to access their tax free cash now, and take their earnings later .

Pension Age and Early Retirement are key issues looked at by My UK Pension Plan, an online service which connects individuals with Financial Advisers

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