Pension Pathways

Income Drawdown allows you to keep your pension invested while withdrawing regular or lump sum payments from your pension pot. This option offers flexibility in how and when you access your pension, but it also comes with risks that need to be carefully considered.

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Unlike annuities, which guarantee a fixed income for life, income drawdown lets you maintain control over your funds and withdraw as much or as little as you need. However, it’s important to note that the value of your pension can fluctuate with market conditions, and there is no guarantee that your pension will last throughout retirement.

• Risk of Running Out of Money
  If you withdraw too much from your pension pot or if your investments don’t perform as expected, you may run out of money before the end of your retirement. It’s important to regularly assess how much you are withdrawing and ensure it aligns with your long-term goals.

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• Investment Risks
  With income drawdown, your pension savings remain invested in the market, which means the value of your pot can increase or decrease based on market performance. It’s essential to understand the potential risks associated with the market and how your investments are managed.

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• Charges and Fees
  Income drawdown plans may carry fees, including charges for managing your investments or for setting up the drawdown plan. Be sure to understand these costs and how they may impact your overall pension pot over time.

While Income Drawdown is a flexible option for accessing your pension savings, there are other pathways to consider, depending on your financial goals and preferences. Here are some key alternatives:

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Annuities

An annuity is a financial product that guarantees a fixed income for life in exchange for your pension pot. With an annuity, you know exactly how much you will receive each month, providing stability and peace of mind throughout retirement. However, once you purchase an annuity, you generally cannot change the amount or access your lump sum.

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Pros:

• Guaranteed, regular income for life

• Predictable and stable income stream

 

Cons:

• Limited flexibility in accessing your money

• Fixed income may not keep pace with inflation

• Once purchased, cannot change terms or access funds

 

Guaranteed Drawdown or Fixed-Term Drawdown

Guaranteed Drawdown or Fixed-Term Drawdown are alternatives that offer a set income for a fixed period, providing more predictability than traditional Income Drawdown. These options can provide a predictable income, but your remaining funds will still be subject to market performance after the fixed term.

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Pros:

• Regular income for a set period

• More predictable than traditional drawdown

 

Cons:

• Less flexibility compared to Income Drawdown

• The value of your remaining pension pot is still subject to market risk after the fixed term ends

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These options offer different levels of flexibility, certainty, and risk, so it's important to consider what aligns best with your retirement goals. We recommend seeking independent financial advice to help guide you toward the most suitable option for your needs.

While we do not provide personal financial advice, we recommend the following actions to help you make an informed decision:

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• Seek Independent Financial Advice
  If you are unsure whether income drawdown is the right choice for you, we recommend seeking advice from a regulated financial adviser. An independent adviser can provide personalised guidance, taking into account your individual circumstances, goals, and risk tolerance.

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• Use Pension Wise
  Pension Wise is a free government-backed service designed to provide guidance to individuals over 50 who are considering accessing their pension savings. This service can help you understand the different options available and offer valuable insights into income drawdown. Visit www.pensionwise.gov.uk for more information or to book a free appointment.

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• Understand Your Withdrawal Strategy
  It’s important to consider how much income you plan to draw from your pension pot. Over-withdrawing can deplete your funds prematurely. We recommend regularly reviewing your drawdown strategy to ensure it aligns with your long-term retirement needs.

At Vanquish Asset Management, we are committed to providing you with all the information you need to make an informed decision about income drawdown. Here’s what you can expect from us:

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• Clear and detailed explanations of income drawdown, including benefits and risks.

• Full transparency on any fees or charges that may apply.

• Guidance on the importance of seeking independent financial advice and/or utilising the government's free Pension Wise service.

If you are ready to proceed with income drawdown or have further questions, please get in touch with our team. We can provide you with detailed information about how income drawdown works and assist you in setting up your account.

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Important Notice: Please note that we do not offer personalised financial advice regarding pension options. All decisions should be based on your individual circumstances, and we strongly recommend seeking advice from a regulated financial adviser if necessary.