If you’re considering investing in a Fixed Term Retirement Plan (FTRP), it’s often useful to read an example of how you could make the plan work for you. We’ve put together some scenarios to give you an idea of how different people could use the Fixed Term Retirement Plan.
These scenarios are fictitious and demonstrate examples of how FTRP may work in practice.
Gareth, 60, is divorced with a son and grandchild.
He wants to continue working but reduce his hours to ease himself into retirement. Gareth has a pension fund of £59,000, and he'd like to take 25% tax-free cash to top up his savings.
Gareth's financial adviser explains that a FTRP will allow him to:
Gareth is happy with his FTRP, and when the seven-year plan matures he's ready to fully retire and buy an annuity to provide an income for the rest of his life.
Michael, 63, is married with a daughter.
He's not ready to retire and has a pension fund of £80,000. Michael would like to take tax-free cash to clear his mortgage and help pay for his daughter's wedding.
Michael's financial adviser suggests a FTRP is a good option as it allows him to:
A FTRP also offers flexible death benefits so if anything happens to Michael during the five year plan, the money from his pension plan will go to his wife. And with a FTRP, she can reinvest the money rather than being tied to an annuity.
Michael opts for a FTRP, but sadly passes away after a car accident a year later.
His wife receives the current value of the Aviva Guaranteed Fund as a lump sum, which is subject to tax.
Michael's wife puts the money into an income drawdown plan, this will allow her to change her income level to supplement her own annuity as and when she needs to.
Tracey, 62, is married with no children.
She wants to retire now and has a pension fund of £70,000. Tracey needs an income but isn't ready to commit to a lifetime annuity. Her pension fund is currently invested in income drawdown, but she's uncomfortable with the way its value fluctuates. She'd prefer a more stable option.
Tracey's financial adviser recommends a FTRP because it will allow her to:
Tracey takes her adviser's recommendation and at maturity, she buys an annuity. Due to a heart attack that she suffered during the term of the plan, she qualifies for enhanced rates, which gives her a higher income than she would've received with a standard annuity.
You can only invest in a Fixed Term Retirement Plan through a financial adviser. The adviser will be able to tell you if this product is suitable for you.
If you want financial advice, please contact your financial adviser. If you don't have a financial adviser you can find one via www.unbiased.co.uk.
For new policy enquiries please speak to your financial adviser.
If you are an existing customer and you have any queries or need information, talk to a member of our team by calling 0845 300 1274.
For new policy enquiries please speak to your financial adviser. If you don't have an adviser, find one near you at http://www.unbiased.co.uk/.
If you are an existing customer, please call:
0845 301 6385
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