Annuities

Why shop around?

What are annuities?

The money to purchase an annuity will usually come from the pension fund which you have built up with money paid in by you (and your employer) over your working life. 

" ...using the open market option can often result in a significant boost to the annuity income you will receive"

         

To get the best annuity rates you should always ensure that you exercise your right to shop around for the best deal on your annuity by using the Open Market Option. In addition to get the best annuity rates you should also have your health and lifestyle taken into account, as this can often result in a significant boost to the annuity income you will receive for the rest of your life.

An annuity pays a guaranteed regular income to you for the rest of your life. An annuity will pay out for as long as you live and will cease when you die - unless you arrange for the annuity income to continue to be paid to your spouse or dependants after your death.

Before converting your pension fund to an annuity, you are normally entitled to take up to 25% of the value of your fund as tax-free cash. This is also known as a Pension Commencement Lump Sum. You can use this money however you want, with the only exception being that you cannot invest it in another pension. Taking this tax free sum will reduce the money available to buy your annuity and also reduce your annuity income in retirement.

The amount of income you receive as an annuity will reflect how much you have in your pension fund and how long the annuity provider expects you to live for and if you have sought out the best annuity rates. The annuity income will usually be paid monthly into your bank account. If you wish, you can choose to have the annuity income paid quarterly or annually rather than monthly.

Your annuity is subject to tax, just like your salary /earnings are.

As everyone's circumstances are different, and before you make any decisions on buying an annuity, we strongly encourage you to seek personal annuity advice. An Independent Financial Adviser will be able to provide advice on the best annuity for your needs and seek out the best annuity rates on your behalf. If you are keen to get an idea of what your pension fund will provide as an income, visit our instant online annuity quote page. 

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Why shop around?

The secret to annuities lies in tailoring your annuity to reflect your individual circumstances and preferences before going on to secure the best annuity rates available.

It is estimated that only around 40% of people coming into retirement are putting themselves in a position of knowing that they selected the right annuity and obtained the best annuity rates.

Once you have committed to an annuity provider and started to receive an annuity income your decision cannot usually be reversed if you have missed the best annuity rate. Deciding therefore on your annuity type, any features to incorporate or omit, allied with getting the best annuity rates is critical. 

Our clients tell us that deciding on the right annuity is often the tricky part. Please talk to us to help ensure that you make an informed choice based on independent annuity advice and ultimately select the best annuity options open to you.

We can also help you find the best annuity rates. Getting the best annuity rates could increase your income by up to 30% in some cases.

   

"...getting the best annuity rates could increase your income by up to 30% in some cases."

The table below illustrates the difference between the best annuity rates and the worst annuity rates currently available under an open market option.  

Type of Annuity

Best Annuity Rates

Worst Annuity Rates

Level Annuity

£3,486

£3,242

Escalating Annuity at 3%

£2,507

£2,294

Enhanced Annuity

£4,535

£3,242

With Profit Annuity

£3,678

£3,230

Above best annuity rates and worst annuity rates currently available under an open market option are based on a male age 65, with a fund of £50,000, buying a single life annuity with the annuity income paid monthly in advance and with no guaranteed periods and are as at 22/10/09.

The With Profit Annuity figures assume an anticipated bonus rate of 4%. This provides a similar starting annuity income to a level annuity. A 4% anticipated bonus rate is an achievable long term rate of investment growth and makes future growth in income more likely.

Our starting point in ensuring that you do get the best annuity rates when receiving advice is to check what annuity rates your pension provider is offering you first. The annuity rate they offer you as an existing customer is usually better than the annuity rate they make available to new customers. In addition, they may offer a guaranteed annuity rate under your pension, which may be higher than the best annuity rates offered in the open market. 

With your existing provider's annuity as a benchmark, we then use your open market option to shop around the whole of the annuity market place in order to source the best annuity rates.

If you or members of your family are considering purchasing an annuity, please feel free to contact us for personal annuity advice from an Independent Financial Adviser. We are able to provide home appointments across the whole of West Sussex - Brighton, Hove, Haywards Heath & Crawley, East Sussex, Surrey - Croydon Sutton, Reigate, Redhill,  South London - Wimbledon, Fulham, Chelsea and Hammersmith and Central London.

Get an idea of just what income your pension fund may buy, using our instant online annuity quote software. Instant online annuity quotes

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