At Francis Clark Financial Planning we believe that the very concept of ‘retirement’ is out of date. A new generation is choosing to stop full time work on their own terms. They are fitter, healthier and have the desire and energy to do more than ever before. They expect choice and flexibility from their financial products and do not want to be ‘locked in’ to a product for life. That’s why we are doing our best to help retirees take advantage of their OMO rights to shop around."

Colin Evans
Director

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Example of the Living Time Income Plan

Russell and Liz, aged 56 and 54 respectively, are both in good health and have full time jobs. Liz has a pension fund as well and is planning to retire at 60. Russell has decided to work part time until he retires at age 65.

Russell has a pension pot of £260,000 and an outstanding mortgage of £25,000. He wants to top up his income over the next nine years to maintain their standard of living, but does not want to drawdown too much of his pension fund. They want to keep their income options open and do not want to commit to a lifetime annuity now. Russell does not want to risk his pension money on the stock market.

We recommended taking a Pension Commencement Cash Sum of £65,000 to repay the mortgage and provide some extra cash. Russell decides to invest the balance of £195,000 in the Living Time Income Plan with AIG Life, paying a regular income of £10,700 each year until his 65th birthday, and guaranteeing them a maturity amount of £165, 350 at the end of the term. At this point they will reassess their financial situation and income requirements, taking into account that Russell will then start to receive his state pension.

Russell also chose a spouse’s benefit of two-thirds, so that if he dies before age 65 Liz will receive an annual income of £7,133 provided this income remains within legislative limits, for the balance of the term. In this event AIG Life also guarantee her a maturity amount of £110,233 for reinvestment into another pension product with a provider of her choice, at the end of the term.