Phased retirement, sometimes known as staggered retirement, allows the purchase of the annuity to be phased giving flexibility at retirement. Staggered or Phased Retirement plans achieve this flexibility by periodically encashing segments of the plan to produce pension income. These plans are usually split into many individual segments, perhaps a 100 or more..
You need to review your income each year to determine the level of required pension income, then you just encash the required number of segments to achieve this level of income. You can also take 25% tax free cash from the segments, any remaining fund remains invested and can benefit from investment returns of the assets. Although with Phased retirement as with any other fund you should remember that the value of these assets could go down as well.
At age 75 the remaining segments must be converted to annuity or transferred to an Alternatively Secured Pension (ASP) plan. The rules for ASP are completely different and it would be very wise to seek advice well in advance of reaching age 75.
As these plans are quite complex they tend to be only suitable to pension funds in excess of £100,000 although in exception circumstances could be suitable for smaller funds. We strongly recommend seeking independent financial advice before entering into an agreement for phased retirement.
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