"The best performing pension could produce more than three times more pension income than the worst performing one. The really bad news is that your pension fund is more likely to be amongst the bad than the good" The Observer
The phrase ‘phased retirement’ is somewhat of a misnomer as there is no requirement for the pension scheme member to retire, or even partially retire, to follow this strategy.
Simply, a personal pension scheme member may decide to start to take (technically known as ‘vesting’) benefits from a part of his fund at the age of, say, 60. This will provide him with a tax free lump sum and a residual annuity lifetime income in that year. In each future year he vests further segments of his remaining fund for further tax free lump sums and building upon the lifetime annuity income provided from earlier years.
Phased retirement (which we believe is better termed ‘staggered vesting’) can be appropriate for certain people. It can be adopted in isolation but is usually preferred in conjunction with income drawdown and conventional annuities. Sounds complicated, so...