We aim to change retirement products. Automated withdrawals to make pension income simpler and safer is just the first step. More improvements to our auto proposition are coming soon.
When you retire, the last thing you’ll want to do is worry where your monthly income will come from, will your pots last, or spend your time dealing with getting money from various pension providers.
Until 2015, when you reached retirement, nearly everyone had to convert all their pension pot into a guaranteed income for life (usually called an annuity). Annuities were unpopular for a few reasons, but they did have one great feature. You didn’t need to think! You bought one and after that, the money just hit your bank account from one place each month for life.
So what happens now?
In 2015 everything changed. New legislation meant you no longer had to buy an annuity at retirement. You could now also take your money as cash, or by using drawdown – which leaves your money invested, but lets you take a regular income from it.
This choice is very popular, but you need to think carefully and make some complex choices, such as:
- Where should I invest my money in drawdown?
- What is the most tax efficient way to take my money?
- How long will I live and need the money for?
And perhaps, most crucially:
- How much should I take each year to avoid running out of money?
Who does that thinking?
Around half of retirees who choose drawdown opt to pay for an adviser. This is a great choice, as a good adviser will think about everything for you and help you make the right decisions, but it costs money.
If you don’t pay for advice you need to do the thinking yourself. OK, but….
- It’s very hard to plan and execute drawdown on your own and get it all right as it’s very complex
- It takes time and most retirees have better things to think about, like enjoying retirement!
So wouldn’t it be good if there were a third option? What if your pension provider did the thinking for you?
A new automated approach
What if you could build a plan whilst you are still saving. As you get closer to retirement refine that plan as you know what has happened, you are more likely to know what you need and finally have a better idea of what else you have, any old final salary pensions, state pension etc.
Guiide already does this for you, you can build, track and refine your plan right now for free. Just tell us what you want, what you have and we do the rest. Then come back whenever you want and refine it given what’s changed.
Building and refine a plan before retirement is great, but when you come to retirement you want to put this plan in place. How do you do that?
At retirement…
OK so you are now ready to retire and have your final plan you want to start with. You can put this place with your current provider or providers, but that won’t be easy.
That’s why we built Guiide.auto and have chosen Penfold, the tech savvy pension provider, as our first partner for it.
If you choose the Guiide.auto product through us with Penfold, they will bring together all your defined contribution pension pots, then when you retire they will check your plan with us. Your tax free lump sum and income will simply be paid each month as per you plan, until you want to change it (if you ever do).
It’s old-style simplicity that still maintains the flexibility of the new pension freedoms.
But what if…?
…I want to take a one-off payment – No problem. You can request a payment from Penfold directly and receive this in addition to your usual expected withdrawal. Guiide will even show you how to make tax-efficient extra withdrawals if you need help.
…I want to change my long term plan – Again, no problem. Things will change. You can track your plan whenever you want in Guiide’s Dashboard and Track page and change it on each anniversary if you want to.
…I run out of money – The initial Guiide plan is designed to last for your expected lifetime if things go as expected. If you take some added withdrawals, or things don’t go as expected, our Dashboard and Track page will let you check if you are still on course to cover your expected lifespan. If not, just adjust it as above. We provide this holding hand throughout retirement to greatly reduce the risk of this happening.
Where will my money be invested?
Initially in Penfolds default Lifetime plan which reduces risk as you get older. You can always choose one of their other plans. These are Standard, Sustainable or Sharia.
In addition to these funds, a few months after launch Guiide.auto is planning to allow you to purchase some guaranteed income with some of your pots. You can model it within a Guiide plan and if you choose to buy some, it will be paid every month into your pension pot for as long as you live.
This gives you a great mix of guaranteed and non guaranteed income, with all the flexibility of taking income when you choose. You can see more details on this in our blog here.
OK, but whats the cost?
It costs nothing more to use Guiide.auto than it does a normal Penfold product. You get all the benefits of Guiide, with the ease of automated payments for not added cost. You can see Penfold’s fees here. As you can see they are all-in low costs, with no hidden extras.
Sound good?
We’ve had a great response to our previous blogs on this. It’s shown us that people are interested in the idea of just having their pension pot payments done for them and the first customers are now coming through.
Want to join them? Just go to Guiide, build a plan if you haven’t already and check out Guiide.auto in our new Dashboard and Track area. Any questions? Just send us a message via our chat help.
