Defined-benefit (DB) pensions are rare outside the public sector, but if you are lucky enough to have one, it can play a formidable part in your retirement arsenal. A secure, guaranteed income, which covers part or even all of your everyday needs, makes planning much easier. It also gives you greater flexibility over how you approach the rest of your investments. However, having more choices means making more decisions, and getting started is not always straightforward.
Emma, 60, is planning to retire this year, joining her husband Charles, 58, who stopped work late last year after taking voluntary redundancy. Charles has a DB pension due to be paid out shortly, and will also receive a £30,000 tax-free redundancy payout and a £60,000 taxable redundancy payment.
Charles’s DB pension will be an integral part of the couple’s retirement income. But they have some decisions to make about how to access the money, as well as how to invest Charles’s redundancy money.