Why, you ask, do we want to highlight this again? Because these days, too many people are heading into retirement with their financial future dependent on a market bet, when what they really need is a guarantee.
The Personal Pension guarantees an income for life. A guaranteed monthly annuity paycheck to sustain your retirement no matter how long you live or what’s happening with the financial markets.
Guaranteed retirement income is a serious promise, and one that we can’t make alone. Your retirement is too important to leave in the hands of any company that doesn’t have billions of dollars of capital to keep you safe. Our role is to make everything safe and easy for you, which is why we work with the largest, oldest, and highest-rated insurance companies to provide the guarantee.
Seeing as insurance companies are experts at managing risk, this arrangement works best for everyone.
With the Personal Pension and income annuities, you pay the insurance company to provide you with a predetermined income level that starts at a certain age and continues for the rest of your life. This protects you from two key risks that come with today’s investment-centric approach to retirement: longevity risk and market risk.
Longevity risk is the risk that you outlive your savings. For example, you may have planned for retirement with enough money to last you until age 90. But low and behold – you reach 90 and you’re still alive.
Market risk is the risk that your investments don’t perform as well as anticipated. For example, you may have planned for retirement assuming your investments would return 6%. But markets being unpredictable they only end up returning 4%. You’ve run out of money.
With the Personal Pension, you get to offload these risks to insurance companies.
When it comes to retirement products, your decision to opt for a Personal Pension costs you the potential of a higher stock market return and instead, promises you a moderate return similar to safe corporate bonds – but that’s locked in without risk.