Other options

When you reach retirement and come to taking an income from your pension fund you do not have to take an annuity to provide you with that income. There are alternatives but they involve increased risk as they are investment based, and the value of your investment may fall and you may receive less income than through an annuity.

In general this option is not recommended unless the value of your pension fund is over £100,000 or you have other financial plans to support you in your retirement.

Bank of Scotland Annuity Service can only provide advice on annuities, if you require advice on the alternative options summarised, make an appointment with one of our financial planning experts.

Other options include:

• Unsecured pension (USP) - Draw an income but keep your pension invested allowing you to manage your own investment decisions if you wish. You can increase and decrease your income as you require and still have the option to purchase a pension annuity in the future. There is a maximum income set by government legislation and this is reviewed every 5 years (This will change to every 3 years from 6th April 2011)
• There is also trivial commutation. If the total value of all your pension funds, including those from which you have already taken benefits, is less than £18,000 you can take all your pensions as a cash lump sum, part of which will be subject to tax, rather than as an income. This can be done between age 60 and 75, but must be completed within a 12 month period.