Guaranteed
Drawdown
Giving you confidence about
your retirement income
1
The new retirement landscape
As you approach retirement, it’s time to make those important financial decisions that
will see you through the rest of your life. And with such crucial choices to make, getting
the right guidance can help you understand the options available to you.
The good news is that you now have even greater freedom and flexibility when it comes
to how you use your savings in retirement. However, making the choice that’s right for you
can be complicated.
As the flexible retirement income specialists, we offer solutions that balance your need
for certainty with the peace of mind that, if your circumstances change, your finances
will adapt to suit your needs.
Change on the horizon
A more personalised approach
Everyone aged 55 and over now has the
freedom to withdraw the money they have
invested in their pension in the way they see
fit. Although the majority of this money will
be subject to income tax, the first 25% of
any pension fund can be taken as a tax-free
cash lump sum.
Although many aspects of retirement are
changing, the need for the best, specialist
advice remains the same. If you are looking
for guidance on the best pensions solution
for you, talking to a Financial Adviser can
help you make a well-informed choice.
New rules guaranteeing free and impartial
advice from independent groups, such as
The Pensions Advisory Service and Citizens
Advice, are giving 18 million people access
to the information they need to make
the right choices in retirement. But if
you want certainty, you need a more
personalised solution.
Our Retirement Portfolio with Guaranteed
Drawdown combines the certainty that your
income is protected, with the potential for
growth. And you also have the flexibility to
change your income when it suits you.
This guide will help you understand more
about Guaranteed Drawdown and also
explain the other options available for
your savings in retirement.
2
What is an Annuity?
An annuity has typically been the most common way to get a guaranteed income for life. A
traditional annuity is a one-off binding agreement where you exchange your pension fund
for a fixed income. Your income is calculated using your age and life expectancy.
Depending on factors including your long-term health and appetite for investment risk,
there are different types of annuity available. An enhanced annuity offers a higher income
if you have health or lifestyle concerns that affect your life expectancy. Investment-linked or
with-profits annuities are based on an underlying investment fund and offer the potential
for growth. With some annuities, you can choose an increasing income, build in a minimum
payment period and add a death benefit for your partner.
The key thing to remember is that whichever annuity you choose, all features are decided
up front and cannot typically be changed later down the line.
Risks of annuities
Advantages of annuities
• B
y deciding your income up front, you
may be locked in to a rate you can’t
change in the future
• Increased rates may be available if you
have health or lifestyle concerns
• Y
our income may fall short of your
lifestyle demands if your health worsens
• C
ommitting to a standard annuity
excludes you from an enhanced annuity,
even if you qualify in the future
• If you add a death benefit for your
partner and they pass away before you
do, you cannot re-allocate those funds
to your own income
• If you include a ten-year guaranteed
income period but die soon after, the
rest of your fund could be lost and you
will not be able to leave a legacy
• A
fixed income doesn’t cover the risk
of inflation.
• If you live longer than predicted, you
may get back more than your initial
purchase price
• T hey are relatively simple and rarely
involve ongoing planning and costs.
3
What is Drawdown?
Drawdown is a flexible way to take your pension and also offers the potential for future growth.
However, as your money remains fully invested in the stock market, there is also a
significant risk that you may lose some or all of the savings you have spent a lifetime earning.
You choose the amount you take from your fund and can tailor your investments based
on your appetite for growth and attitude to risk.
When you pass away, any remaining drawdown pension fund can be used to provide
death benefits, either as a lump sum or as income, to any beneficiary. If you die before the
age of 75 the death benefits are tax-free in most cases.
Risks of drawdown
Advantages of drawdown
• If your fund performs worse than
predicted, you could find it runs out
before the end of your lifetime
• You can retain full control of your fund
• If you continue to withdraw large
amounts in times of poor performance
this risk is even greater
• A
s it is fully invested in a tax-efficient
environment, your money has more
potential for future growth
• E ven with careful fund management
and a cautious approach to the amount
of income you take, there is still the risk
that you will live longer than expected
and end up running out of money
• A
ny unused funds can be passed
to beneficiaries on death and are not
usually subject to inheritance tax
• If your fund runs out, you may find
yourself relying on the state pension
as your only source of income.
• Y
ou have the ability to change income
levels and take payments when needed
• Y
ou have the flexibility to keep your
options open and indefinitely put off
making any final decision.
4
What is Guaranteed Drawdown?
In later life, when looking at retirement income you may value both certainty and flexibility.
But until recently, if you were approaching retirement, you had to choose a retirement
income product that offered either one or the other.
We understand that life is complicated, and what you need today may not be the same as
what you need tomorrow. So we offer you the best of both worlds.
That’s why our Retirement Portfolio comes with a Guaranteed Drawdown option. This
innovative feature takes the security of an annuity and combines it with the flexibility
offered by drawdown. This gives you both the certainty of a guaranteed income for life, and
the flexibility to adapt your arrangements to suit your financial circumstances.
Your money will remain invested and has the potential to grow, and you can still leave it to
the people you care about when you pass away.
How does Guaranteed Drawdown compare to annuities and conventional
drawdown pensions?
Annuity
A type of insurance policy
that provides an income in
exchange for a lump sum
from your pension fund
Guaranteed
Drawdown
Provides a guaranteed
income that you cannot
outlive with all the flexibility
of drawdown*
Drawdown
Drawdown allows you to
take income directly from
your pension fund
Guaranteed
income for life
3
3
✗
Income protected
from market falls
3
3
✗
Fund remains
invested – benefits
from growth
✗
3
3
Guaranteed lockins of growth
✗
Income flexibility
Limited
Death benefits
Limited
3
3
3
✗
3
3
* If you take more, this will reduce your future guaranteed income proportionately.
1. A guaranteed income for life
If you want the confidence that the lifestyle you enjoy is protected, a guaranteed income
for life offers the peace of mind that the money you rely on will never run out.
How much do you need to guarantee?
You can choose to guarantee all or part
of your pension pot.
For example, you may calculate that to
cover your essential living expenses, you
need a minimum income of £5,000 a year
for the rest of your life. However, looking
at your pension fund, you realise it could
provide an annual income of as much as
£10,000. You decide to put half of your pot
in a guarantee, securing an income that
covers your living costs. The other half you
could choose to invest in higher-risk funds,
with a greater chance for growth but with
greater risk and no guarantee.
Funding a longer life
As the quality of medical treatment
continues to improve, we are enjoying
longer, healthier lives. But as life expectancy
increases, we need to plan for the extra
years we spend in retirement.
Recent figures prove that having the security
and peace of mind of an income you can’t
outlive, has never been more important.
2. The flexibility to get an income that suits you
By using our Guaranteed Drawdown feature, you have the flexibility to choose when
and how you take your income.
When?
Flexibility
You have the flexibility to stop and restart
payments in the future. For example, if you
decide to re-enter employment, you can
choose to stop your payments, restarting
them at a later date.
Remember, you have the flexibility to change
your income at any time. This means you can
increase or decrease the amount you take
and the frequency with which you take it.
How often?
Choose the payment schedule that suits your
lifestyle needs, including monthly, quarterly,
termly (every four months), half-yearly or
yearly payments. Plus, if you need a top-up
to your income, you can always access
further funds as a one-off.
How much?
When you set up your guarantee, you can
choose to take a level of guaranteed income.
However, you have the flexibility to take
less or more of this guaranteed income
depending on your needs, now and in the
future.
If you take less, this helps to preserve your
fund and gives you an increased opportunity
to grow the size of your fund.
If you take more, this will reduce your future
guaranteed income proportionately.
You can take advantage of the increased
pension flexibility with the option to take
as much of your pension pot as you like
as a taxed lump sum but this will
reduce your future guaranteed benefit
proportionately.
3. The ability to enjoy any growth in your investments
We carry out an annual review of your investment. If the value of your fund has grown,
we lock in this higher figure. This means your guaranteed income increases.
Using guarantees means that you can be safe in the knowledge that your investment
is protected. However, it’s important that we also offer you the potential for investment
growth. That’s why we offer a range of funds to invest in, suited to the amount of risk you
feel comfortable taking.
4. The peace of mind of a guaranteed death benefit
Your pension not only supports you, it can be tailored to protect the well-being of those
you care about. With a guaranteed death benefit or by adding joint life, you can ensure
that your partner enjoys a comfortable lifestyle, even when you aren’t there to share it.
A guaranteed death benefit
Joint life
One of the advantages of using the
Guaranteed Drawdown feature is that it
gives you an automatic death benefit. This
means that your partner and beneficiaries
can still rely on the safety net your guarantee
provides and won’t suffer if the value of your
investment suddenly drops.
By choosing joint life, your income will cover
you for your lifetime and your partner after
you pass away.
5
Is Guaranteed Drawdown
right for me?
If you are about to retire and want both the certainty of a guaranteed income for life
and the flexibility to change your financial arrangements to suit your lifestyle, using our
Guaranteed Drawdown feature is the perfect solution.
Guaranteed Drawdown is right for you if:
• You are aged 55 or over
• Y
ou are at retirement and want an
income you can rely on
• Y
ou are cautious and cannot afford for
your income to drop, but are prepared to
invest in equities for growth potential
• Y
ou are continuing to work full time
or part time but want to start using your
pension fund to supplement income
• Y
ou don’t want to give up access to your
fund and want your unused pension fund
to provide a legacy.
• Y
ou are in retirement and are worried
about the performance of your existing
drawdown plan.
6
Why Guaranteed Drawdown
from MetLife?
At MetLife, we are committed to giving you the best of both worlds: a guaranteed income
for life and the potential for market growth.
With the certainty and flexibility of our Retirement Portfolio with Guaranteed Drawdown,
we can offer you:
• A
guaranteed level of income that won’t
run out
• P hased Guaranteed Drawdown, allowing
you to take what you need tax-efficiently
and benefit from MetLife’s guaranteed
deferral increases
• T he flexibility to stop, restart and change
your income whenever you want
• The option to withdraw taxed lump sums
• A
range of investment options from
leading fund manager BlackRock® that
reduce the effect of market volatility.
• U
p to 50% exposure to equities,
increasing the potential to grow
your investments
• A
nnual lock-ins of performance that
can increase your guaranteed income
• S ingle or joint life options so your
spouse or partner can also benefit
from guaranteed income
• G
uaranteed death benefit. Any of your
beneficiaries can use this to provide
income or take a lump sum
• T he ability to make further pension
contributions, helping you benefit from
valuable tax relief and increase your
guaranteed income.
Why MetLife?
With MetLife, you can be certain that your future is in the safest hands possible.
Our history, reach and devotion to eliminating uncertainty, all help to give your
money the best possible chance to grow.
As the UK’s leading provider of flexible retirement income, we’ve been proudly
offering peace of mind to people like you since 2007.
As a MetLife client, you’ll benefit from the certainty that your investments are
expertly managed by market-leading retirement specialists.
• We work with over 5,000 advisers
• We have written over 40,000 policies
• We provide award-winning product innovation and 5-star service.
For more information on our Retirement Portfolio with Guaranteed Drawdown
solutions, speak to your Financial Adviser.
To discover more about MetLife and the exceptional products
and services we have to offer, visit www.metlife.co.uk
Want to know more?
Speak to your Financial Adviser to learn how our
Retirement Portfolio could benefit you.
If you are looking for a Financial Adviser, you can find
one in your local area at www.unbiased.co.uk.
Visit www.metlife.co.uk for more information.
Products and services are offered by MetLife Europe Limited which is an affiliate of MetLife, Inc. and operates
under the “MetLife” brand.
MetLife Europe Limited is authorised by the Central Bank of Ireland and subject to limited regulation by the Financial Conduct
Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.
Registered address: 20 on Hatch, Lower Hatch Street, Dublin 2, Ireland. Registration number 415123. UK branch address:
One Canada Square, Canary Wharf, London E14 5AA. Branch registration number BR008866. www.metlife.co.uk ©2015PNTS
WM15 00 052 l 1682.3.2015.
ENTER a more certain world