What do we do with the PSO?

Smart switching between retirement income and flexibility

Between 2017 and 2019, many DGAs converted their self-administered pension pot to a Retirement Obligation (PSO). This was a good move, but now they are faced with a new choice: do we keep the PSO in the BV or transfer it to something more flexible such as an annuity?

Distribute directly from the BV: tight plan but with strict rules
If you choose to pay out directly from your limited company, you are bound by strict rules. From your AOW you must receive your pension pot within 20 years. If you want to start paying out earlier, up to 5 years before your AOW, then your payout takes just as happily 5 years longer. Every year you look at the return and adjust the payout a bit. Tight, but little wiggle room.

The flexible route: switching to an annuity
Want more freedom? Then you can move your ODV capital to a savings or investment annuity outside your limited company. This gives you advantages such as:

• Flexible term: You choose whether your benefit runs for shorter or longer than 20 years.
• Choose start date: You can start the benefit up to 5 years after your state pension.

Why switch?
There are a few good reasons to move your ODV capital to an outside annuity:

1. BV clean up: If you are done with entrepreneurship and want to wind up your limited liability company, this is a good idea. This way you make your finances simpler, even for later.
2. Stay in business: If you're not done working after your state pension, switching offers more room to combine income/salary and retirement smartly.
3. Enjoy faster: If your pension pot is on the small side, it may be attractive to enjoy your money sooner than the mandatory 20 years.
4. Draw your own plan: Want more control over how and when you get your money? An annuity lets you decide the pace and amount of your benefits.

A savings or investment annuity: what suits you?
Whether you go for the security of a guaranteed annuity or the opportunities of the stock market with an investment annuity, depends entirely on what you find important and what risk you are able and willing to bear. Do you want a mix of both? That is also possible! It's all about what fits best with your life and your vision for the future.

Conclusion: BV ODV payment or annuity payment?
The choice depends entirely on your personal situation and preferences. The important thing is to know that you have options and that you are not stuck with a standard path.