Phased retirement allows you the benefit of segmenting your pension arrangements, in such a way that each segment has a proportion of tax-free cash and income. This option allows a great deal of flexibility and allows you to utilise the tax-free cash lump sum in such a way as to provide a tax efficient income. For example, you could use a portion of your tax free cash entitlement to provide a tax free lump sum, while leaving the remaining portion invested within your pension and allow it to grow over time.

This option also provides more generous benefits on death prior to age 75.

The choice between phased drawdown and income drawdown will come down to whether or not you have an immediate need for a capital lump sum. If you do, income drawdown is more appropriate. If you do not, phased drawdown “may” be more appropriate, subject to your proximity to the lifetime allowance.

However when considering taking phased drawdown from your pension fund, you need to be aware of the following issues:

• If you withdraw money at a rate greater than the growth achieved by your investments, your remaining fund will reduce in value. The level of income you take will need to be reviewed if the fund becomes too small.
• The income you receive may be lower than the amount you could receive from an annuity, depending on the performance of your investments.
• The rules governing how much income you can take directly from your pension fund may change. This could mean that the income you can take from the investment no longer meets your requirements.

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.