Phased Retirement Annuity
Published / Last Updated on 28/06/2021
What are Phased Retirement Annuities?
The ability to stage, stagger or phase your retirement gradually by only using a proportion of your pension fund to release tax free cash and lifetime annuity income when needed with the balance of the untouched pension pots left to hopefully grow until you need more tax free cash and to increase your annuity income in the future.
You can choose to transfer your pension fund to another provider (or remain with your existing provider) and utilise phased retirement. This gives you the facility of varying future income and tax-free cash levels to fit in with your overall financial plan and circumstances.
Phased Retirement, sometimes known as “staggered vesting”, offers this by dividing the pension fund into a number of identical policies within the plan. Imagine your pension plan is divided say into e.g. 100 mini pension pots.
Phased Annuity or Staggered Vesting provides an alternative means of obtaining income by encashing a required number of policies in stages e.g. encash 10 of your 100 pots to utilise the 25% tax free cash from those 10 pots only and then buy lifetime annuities with the 75% balance of those same 10 pots. The remaining 90 pots remain investing in full until you are ready to increase tax free cash taken and/or annuity income in the future e.g. on an annual basis.
Each annuity purchased provides ongoing income for life and can be purchased on a different basis each year.
