“You have the time it takes for the board to revolve…”

When we make decisions about what to buy, it is normal to follow some kind of logical process to ensure that the selected product does the job that it is required to do.  Decisions such as what clothes to wear or car to buy involve a system of identifying what needs to be solved, looking at the available options and matching the best option to the situation.  It is this logic that ensures we don’t wear wellies in summer or end up in predicaments like this;

‘Daddy, why is that policeman waving at you?’
‘What policeman? Oh, now I see him, yes well, erm…I’m sure he just wants to give me directions.  I’ll just pull over.’
‘Ahem, good evening officer.’
‘Good evening wing commander.  Having a little trouble getting this one off the ground are we sir?’
‘Oh I didn’t think I was going that fast?’
‘You were significantly over the speed limit sir, although that wasn’t the only thing that drew my attention.’
‘Really, what else have I done? The car’s just passed its MOT so I am sure it’s roadworthy.’
‘Yes, the car appears roadworthy enough.  Perhaps you may care to take another guess as to why I may have wanted to have a little chat with you.’
‘Erm….I really can’t think officer….’
‘Perhaps if you looked on the roof sir and tell me if there appears to be anything out of the ordinary?’
‘The roof rack? ‘
‘On the roof rack sir……’
‘On the roof rack…? Oh, the corpse.’
‘Yes sir.  The corpse lashed to the roof rack.’
‘That would be Mr Ridgwell but he’s properly secured, I made sure of that.’
‘Yes sir I’m sure you did and I have given you extra credit for tying the luminescent jacket around his protruding legs.  However my primary concern, being a policeman and all, was to how he ended up dead and attached to your roof, rather than whether the straps used to secure him were sufficiently robust.’
‘Oh, yes I see.  Well the back seat was full unfortunately.  No room, hence the old roof straps.’
‘The back seat is full is it? I have to ask, although every sinew of my being is begging me not to, what is on the back seat sir?’
‘Erm, it’s Mr Smithwick.’
‘And he would be………’
‘Dead also I’m afraid.’
‘Of course.  Now again, I hesitate to ask, but are there any more dead people in your vehicle?’
‘No officer, that’s all I could fit in.  I had to leave room for the children, I’m taking them to school you see.’
‘The children?’
‘Yes, I’m just dropping little Jonny off now.  It’s his first day and he is a bit nervous.’
‘Well I am sure that sitting next to the decomposing Mr Smithwick on the journey will have settled his nerves.  In any event I’m afraid that you’re going to have come with me.  Do you have a lawyer? I’d go for a good one if I were you sir.’
‘Oh, you think l killed them!!! Ha ha no that’s not the case, I’m an undertaker you see.’
‘An undertaker? In a yellow Toyota Prius?’
‘Yes, just bought it last week.  It’s a beauty isn’t it?’
‘Again, at the risk of asking a stupid question, why did you not buy a hearse if you were going to be a undertaker?’
‘A what?’
‘A hearse sir. Big black thing with space for a grieving widow in the back and a coffin in the rear.’
‘That sounds exactly the kind of thing I need.’
‘You don’t say. So why didn’t you buy one?’
‘Well I asked around for advice on the best car and Sad Mick in the pub said that his Toyota Prius was very fuel efficient so I went with that.’
‘Oh, well that makes perfect sense sir.  Why don’t you just come down to the station with me and you can explain it all again to the sergeant.’

This mirrors an often-played out scenario when it comes to our pensions, and especially when choosing the options at retirement.  Logic can go out of the window and there is a tendency to rush out and buy the first thing that is put in front of us, which is often a very uncompetitive standard annuity from the pension provider.  Probably the same as Sad Mick’s.

So if you have spent forty years grafting to build your pension pot, then it may be worthwhile to give it some thought before blundering in and ticking the first box on the form.  Unfortunately some people take more time deciding what to have for their tea than they spend researching their pension options. 

There are too many such options to list here in detail but to give you an idea; in addition to standard annuities there are also impaired life annuities that can give you a higher income if you have health issues.  Purchased life annuities do the same job but provide you with a large part of your income without that pesky income tax.  Capped drawdown permits you to vary the level of income that you take from your pension and even allows it to continue growing whilst you are drawing it.  You can take the tax-free lump sum and leave the rest of the pension to grow, even adding to it if you want.  You can take the tax-free lump sum and pay some of it back into a new pension fund and claim tax relief on the contribution, even carrying forward any unused tax relief from previous years.  You can purchase a temporary annuity that you can change after five years or a capital protected annuity where you get your money back when you die.  Phased pensions can allow you to drip feed your fund into an annuity or drawdown and take your income in increasing installments.  You can also ensure that your remaining pension fund is left to your nearest and dearest when you slip off this mortal coil or you may even be able to use flexible drawdown which can allow you to access all of your pot as cash, and you don’t even need to be dead.  Which is convenient.

It is all the more important with pensions to do the research before you make your decision as annuities cannot be changed once purchased.  Once done, that’s it; it is with you for life.  There is no point asking the questions six months later of what you could have had.  Not unless you want to be like the losing contestants on Bullseye as Jim Bowen forced them, with solemn cruelty, to ‘see what they could have won’, as the wondrous yet totally inappropriate prizes were paraded in front of the defeated couple, one of which was pondering why he had taken Sad Mick’s advice to partner up with Bong Eyed Bob who was apparently ‘the best darts player in the world.’ Thanks Mick.

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