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How does our Protected Retirement Plan suit you?

It can be difficult to decide which retirement plans best suit your needs. The scenarios below, although not based on real examples, illustrate different features of the Protected Retirement Plan (PRP) and how it can work for people like you in various situations.

55 year old lady picking tomatoes in the garden

Jenny hopes to bridge her income


Scenario

Jenny is a 55 year-old self-employed training consultant. She wants to reduce her hours until she's 60, at this point she may consider retiring.

She wants to use some of her pension fund to bridge her income over the next five years while she is working reduced hours. She would also like to treat herself to a holiday or a new car with tax free cash.

Jenny is aware that there are risks of investing her pension savings in the stock market.

Possible solution

  • Take the maximum tax free cash.
  • Use the remainder to buy a PRP that pays £400 a month for five years.
  • Use the guaranteed maturity value to buy another retirement income product or, to buy a taxable lump sum for when she decides to retire from work.

The outcome

With the security of income and guaranteed maturity value, Jenny will not need to worry about investment performance.

62 year old man on a laptop taking a drink from a mug

Ravi would like to minimise his tax


Scenario

Ravi is a healthy 62 year old. He has a pension fund of £75,000 and invested assets, including a buy to let property.

He would like to take his entire pension fund as a single cash lump sum but is unsure on the most tax efficient way of doing this.

Possible solution

Use the LV=Retirement Pathfinder tool to produce a model tax bill. Ravi is a basic tax payer so would be subject to tax at 40%, therefore he needs an alternative solution.

  • Get a four year PRP with a nil guaranteed maturity value.
  • Take the whole pension fund as income over four years.

The outcome

Taking his pension fund as income means that Ravi will minimise the amount of tax he has to pay.

65 year old lady sitting in the garden wearing a sun hat and holding a book

Joan needs to keep her options open

Scenario

Joan is aged 65 and is in good health. She is expecting to live for a long time in her retirement.

She doesn't qualify for an enhanced annuity but Joan would like to receive a guaranteed income paid over a number of years.

She is very wary that her circumstances may change in the future so therefore she would like to keep her options open.

Possible solution

  • Setting up a PRP to her anticipated life expectancy, with a higher income than a standard annuity but with the potential for a lump sum to provide future income if she lives longer.
  • Buy a 20 year PRP with the peace of mind that she can use the conversion feature to convert to any other retirement products or, take taxable cash during the term of the plan.

The outcome

Joan has the flexibility to convert to other retirement products if her circumstances change.

She can keep her options open and receive a lump sum if she lives longer than expected.

65 year old man leaning on a car outside with sunglasses on

Stephen wants to invest his pension fund

Scenario

Stephen is 65 and has given up his full- time employment for a part-time job on less money.

He would like to use his personal pension to provide a lump sum to buy a new car and visit his daughter in Australia.

Stephen wants to invest the remainder of his fund so that when he stops working, he has another income on top of his state pension.

Possible solution

  • Opt for the blended solution.
  • Use the tax free cash from his pension fund to fund the car and trip to Australia.
  • Part of his fund can be used to buy a PRP to provide guaranteed income for ten years.
  • The remaining fund can be put in a Flexible Guaranteed Fund with a 10 year guarantee.

The outcome

Stephen has the money to buy the car he wants and visit his daughter. He also has the security of knowing that, regardless of what happens, he has a fund at age 75 to supplement his state pension.

Have a commitment free chat with a Pension Specialist

Call us on 0800 032 9301

TextDirect: First dial 18001

Lines open: 8.30am to 6pm Monday to Friday. We may record and/or monitor calls for training and audit purposes.

Start your conversation with a pension specialist today by telling us about:

  • Your current pension pots
  • Any contributions you're making
  • How much you've already saved