Centenarians On The Rise, Can Opting For An Early Pension Lump Sum Assist?

It has for some time been accepted that progress in medicine, lifestyle and an appreciation of the effects which habits like smoking can have on our health means life expectancy is increasing. Future generations are probably going to enjoy much longer and healthier lives on average than their ancestors.

But figures released in April 2011 by the Dept of Work & Pensions illustrate more accurately precisely what that implies. These figures suggest, of the under 16s already alive today, over a quarter are going to reach the age of 100 “and already, the average new-born female is going to live to over 90.

As Steve Webb, Minister for Pensions, commented at the time, this implies that millions of people will spend over a third of their life in retirement. But as the DWP were quick to indicate, this information also coincides with a period where pension savings are in heavy decline.

An ageing population is putting our welfare system under substantial pressure as more of the population need not only pension income but also medical care, incapacity support and help in the home. You can therefore have little belief that a State Pension will offer anything other than a safety cushion when the time comes. If your retirement plans include holidays, visiting relatives and treating yourself on occasion, then it’s the time to take control of your savings and begin building up a retirement fund of your own.

One of the most key decisions you make when it comes to planning your retirement is which annuity or unsecured pension product to choose and, whether to use the 25% early pension lump sum you have entitlement to (taking this will impact on your potential earnings in retirement). It’s this fundamental choice which will determine your ultimate income and is not a decision to be taken lightly.

Information thanks to Adviser Hub. Whatever course of action you decide upon; whether it’s taking out an annuity, unsecured pension or choosing an early pension release, it is recommended you undertake a full pension review with the help of a certified pension adviser.