David’s bespoke option: a combination of income and capital growth

Meet David

David is 55 and starting to reduce his working hours.

He's planning to fully retire at 60, and in the meantime, would like to use his £400,000 pension fund to top up his £32,000 salary without paying extra income tax.

Why this matters for David?

Tax efficiency:
By using his tax-free cash to pay off his mortgage, David avoids unnecessary income tax while reducing his monthly outgoings.

Income stability:
The Guaranteed Income Plan provides a fixed annual income helping him top up his salary without crossing into the higher tax bracket.

Capital protection:
The plan guarantees the return of his investment, giving him peace of mind and a solid base for future planning.

Growth opportunity:
With the security of the guaranteed plan, David feels confident investing his remaining money in a higher-risk funds to potentially boost his retirement savings.

Future flexibility:
At age 60, he’ll have access to the money returned from the plan plus whatever his growth investments have achieved, allowing him to tailor a new income solution for full retirement.

The Adviser's strategy

Freeing up cash to clear debt

David's adviser recommends he takes his full £100,000 tax-free cash to pay off his mortgage and invest £200,000 in a Guaranteed Income Plan for the next five years.

Securing income without extra tax

He uses the combination option selecting to have 100% of his investment returned as a lump sum, so he'll definitely get his £200,000 back when he turns 60 and he'll also get an income of £7,544 every year - without pushing him into a higher tax bracket.

Investing for future growth

With his £200,000 safely being returned in five years, David is free to invest his remaining £100,000 in a range of higher risk funds to get as much growth as possible out of his money.

Combination option, £200,000 investment, 5 year term
	Year 1	Year 2	Year 3	Year 4	Year 5	Total
Guaranteed income	£7,544	£7,544	£7,544	£7,544	£7,544	£37,720
Bonus (not guaranteed)	0	£15	£29	£44	£59	£147
Guaranteed lump sum						£200,000
Additional lump sum (not guaranteed)						£1,934

In this scenario David receives £239,801 back from his investment in the Prudential Guaranteed Income Plan.

Use this strategy with your clients

This plan is great for someone who wants a fixed-term solution that they can reassess and change in a few years’ time. Like David, who can get his lump sum from the plan, and see where the value of his other investments land, and then decide how he wants to reinvest.

We guarantee to pay back up to 100% of your investment amount at the end of the term.
In addition, we’ll pay a guaranteed income throughout.
We’ll never pay less than the guaranteed income but some years we might be able to pay a little bit more.
We’ll never pay less than the guaranteed lump sum but we might be able to pay a little bit more.