Pharmacists Choosing The Right Option At Retirement - Investment-linked Annuities
There are numerous options for pharmacists to produce income in retirement from their accumulated pension funds. In the first of a series of articles, we took a look at guaranteed annuities. Here we will examine a variation on the theme in the form of investment-linked annuities.
To clarify, an annuity is a specified income payable at stated intervals for a fixed or a contingent period, often for the recipient's life, in consideration of a stipulated premium paid either in prior instalment payments or in a single payment. Guaranteed annuities are still by far the most popular method of deriving retirement income. The principle reason for this popularity is that they do so without risk. However, some providers offer investment-linked annuities.
The objective of these plans is to provide potential increases to annuities linked to the underlying performance of investment assets, typically stocks and shares, also known as equities, and property.
Investment-linked annuitants may be allowed to anticipate future returns and take a higher income level, however, if these returns fail to materialise then income levels may fall. For this reason, with-profit annuities have proved distinctly more popular as they offer the prospect of smoothed returns.
The benefit of these types of arrangements is that they produce a reasonably stable income with the potential for increases in income levels coming by way of investment returns. The downsides would be similar to those associated with guaranteed annuities including the lack of flexibility of income, although some recent product introductions into the market now permit some degree of flexibility when choosing income levels.
Clearly the considerations are numerous and are best made with the benefit of professional advice specific to an individual's own circumstances. However, once decisions are made in regards to these issues, an appropriate means of providing for income in retirement can be recommended. Should you require assistance in this regard, please do not hesitate to contact one of our Financial Services Partners, Steve Prosser, Jeff Crewdson or Chris Raggett to discuss your requirements more fully.
In the coming days, we shall the take the opportunity to cover further, alternative retirement vehicles through which pension income can be produced for retiring pharmacists.
Date of Article: 24th July 2009
