Case Study 

Retirement Options

The client contacted us for advice on his options on how to convert his existing pension funds into a retirement income.

The existing providers were contacted for full policy details including confirmation of any guaranteed annuity rates that may be included in the policy. The client was married and it was important to him that his wife be provided for should he pre-decease her.

Both the client and his wife completed a medical questionnaire to allow the enhanced annuity option to be considered. The client had a history of heart disease and therefore it was possible to obtain medically underwritten annuity quotations that provide an enhancement to the standard annuity rates on the market. The enhanced annuity figures were prepared using a range of different options and percentages for the surviving widow’s pension.

The next stage in the process was to consider and discuss the alternative to annuity purchase using Income Drawdown. We also completed a risk profile questionnaire to evaluate the risk profile and capacity for loss.

After considering all options and discussing the merits of annuity purchase against the alternatives the client favoured Income Drawdown. Using a retirement modeller we looked at various levels of income in retirement and the required growth rate required to sustain the level of income. The client favoured Income Drawdown due to the death benefits that would be paid to his wife and the flexibility offered including the possibility of purchasing an annuity at a later date if rates were to improve. The funds were invested in a defensively managed fund that is designed to manage volatility in order to protect the value of the fund.