Retirement is often considered the holiday of a lifetime or the chance to rest and rewind after a busy career. The State provides only a meagre pension and so the pension plans and company schemes you have been paying in to for many years should provide for the little extras when you retire. If you plan to retire in 2012 you may need to think again as annuity rates have plummeted to record lows, mainly caused by the Governments policy on quantitative easing. This means that many retirees are faced with difficult choices of when and how to retire, if at all!

Take the time to consider all of the options available rather than risk rushing in to a poor decision. You should review all of your pensions in detail as some may offer good value if you were to take the benefits immediately whilst other plans may prove better value if you delay. You may even decide to adopt a phased approach to retiring, tapping in to the plans in stages, which could allow annuity rates to improve.

• Some plans provide a guaranteed annuity rate at a specific date so ensure you take up this valuable option. If you miss the date the option is lost and you will be offered a standard annuity.
• Refuse to take the annuity with the current pension provider without first checking whether this is the best annuity in the market. You have a right to an open market option that should provide a better rate.
• Are any of the pensions cash rich as some pensions provide a higher level of tax-free cash? If you fail to spot this then you could lose out when you take the annuity from this plan.
• Do you need all of the tax-free cash from the plan? If your priority is income only then consider taking a combined cash and income stream in phases. This can prove very tax effective as part of the income is tax-free and the pension pot remains invested in a tax efficient wrapper.
• Factor in any health issues as some annuity rates provide enhanced terms on health grounds. This could also add weight to phasing pension benefits where you believe there is a family history of poor health that could potentially affect you later in retirement.
• Some plans may be better value than others so this is worthwhile checking. Higher charges will eat in to the eventual returns so you may be better to ditch the costly plans and opt for the cheaper charged plans. Also some plans include an admin charge on top of the annual management charge on the investments. Some older plans apply penalties where benefits are taken before the selected retirement date. This charge can be hefty if you plan to take benefits early so you may be better to dip into another plan.
• Your plans should take account of a spouse or partner, even where you both have your own pension plans. This should provide even greater flexibility to anyone planning to retire now. With annuity rates providing poor value currently it could mean ‘the other half’ defers the retirement decision until later.
• Even where you both decide that a single annuity is the most appropriate option, you could consider adding a five-year guarantee. There is only a small extra cost for this added benefit that offers good value on death within five years of retiring.
• When does State Pension kick in? It may not be generous but it does provide an inflation-proof income that is guaranteed for life!

Jog your memory back to when you started employment and work forwards to ensure you include all of the company plans you paid in to. You may get a pleasant surprise!

However if retiring now still seems bleak and you are concerned at the current annuity on offer then you may be better to dip in to savings or other investments and leave the pension pot to grow. Consider ditching poor performing shares or cashing in lack lustre ISAs.

If you are feeling overwhelmed and apprehensive about making this decision then you should seriously consider taking advice. There may be a fee for this work, but the outcome may mean you are financially secure for the rest of your life. That is a price worth paying for when you down tools for the last time.