If you want some of your income to be guaranteed, but can be flexible with the remainder, then a different approach – part annuity, part drawdown – combined together is also an option.
In many ways, this is the best of both worlds. You will enjoy an element of security whilst still having the ability to benefit from flexibility and the potential for future investment returns (along with exposure to potential losses too, of course).
There are a two main ways you can go about achieving this combination.
- Blended solution – this is a combination of separate retirement solutions. With the help of an adviser you might seek out the best annuity rate (see Annuities) and best drawdown (see Personal Pension) product and divide up your cash equivalent transfer value from your defined benefit pension scheme between them.
- Hybrid solution – this differs from a blended solution in that the two elements – an annuity equivalent (see Annuities) and drawdown (see Personal Pension) – are held within a single financial product. Income is accumulated within a pension cash account, with the option for it to be retained in cash, reinvested or paid out. This allows for control over the timing of regular and one-off payments. While money and investments stay in the product they are treated as drawdown funds when it comes to paying out pension benefits to your beneficiaries, should you die.
Advantages
- A Hybrid / Blended solution allows you to use part of your benefits to give you an element of secure income and the remainder can be used to give you the benefits associated with a Personal Pension / Income Drawdown arrangement.
- As the Hybrid / Blended solution is a combination of Annuity and Personal Pension please use the links below to review all of the disadvantages of each option
Disadvantages
- This option requires that part of your benefits will be used to provide a secure income. These parts cannot be amended even if your circumstances change.
- As the Hybrid / Blended solution is a combination of Annuity and Personal Pension please use the links below to review all of the disadvantages of each option.
- To review the disadvantages of transferring from a secure benefits scheme click here.
