For financial advisers only
ARC's flexible retirement income options
Aegon Retirement Choices (ARC) can stay with your client throughout their working life and into retirement. Instead of stopping work completely on a specific date, many people now choose a more gradual transition from working life into retirement, and ARC is flexible enough to support a phased approach. Since April 2015, the rules that define how and when people can access their retirement savings have changed significantly, with flexibility and choice becoming more important. ARC is ready to help you and your clients navigate the new range of options available.
ARC offers a seamless transition from saving to taking an income, with a range of flexible options to suit your clients’ needs. With the ARC SIPP clients can choose:
- how they take their income and any tax-free cash (after 55);
- whether they'd like some of their income to be guaranteed for life;
- how much income they take;
- when they start taking income;
- to keep their money invested until they need it; and
- to draw cash lump sums.
Clients now have broadly four income options available to them when they wish to take benefits from their retirement savings, these are:
- drawdown with guarantees;
- flexi-access drawdown;
- annuity; and
- cash lump sums.
ARC can help you facilitate each of these, or use them in combination to build your clients' overall retirement income.
|Cash lump sum||Annuity||Drawdown with guarantees||Flexi-access drawdown|
|Cash in your client's money, and pay tax on savings over 25%* of their total pot||Guarantees an income for life but with limited flexibility||Secure Retirement Income guarantees a minimum income for life, and lets them make changes if needed||Provides an income whilst their fund remains invested but their income isn't guaranteed|
|Guaranteed income for life||Not applicable||Yes||Yes||Not applicable|
|Pass savings to loved ones||Yes||Extra cost||Yes||Yes|
|Make changes if needed||Yes||Not applicable||Yes||Yes|
|Growth potential||Yes||Extra cost||Yes||Yes|
*The amount of tax-free cash available may vary depending on circumstances and any guarantees previously secured.
Any guarantees are based on the ability of the issuing insurance company – in this case Scottish Equitable plc - to pay them. If, for example, that company no longer existed, then the guarantees it provides would be affected.
The value of an investment can fall as well as rise and isn’t guaranteed. Your client could get back less than they originally invested.
Why choose one when your client can have the best of all worlds?
ARC allows your clients to take a combination of these options. So for example, with ARC they could use drawdown with guarantees to cover their essential costs, and invest the rest in flexi-access drawdown, which generally has better growth potential. And if your clients circumstances change, you can move between the two easily. Client income needs are likely to change over time, so the flexibility to make changes to your clients' plans is valuable and it allows them to phase into retirement, over time.