Pension Annuity Advice
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Should I consider a Pension Annuity?
One option if you have built up a pension pot is to convert it to a pension annuity. A pension annuity will provide you with a guaranteed income for the rest of your life by swapping some of your pension savings for a regualr income.
A pension annuity will give you a regular income, so that you know how much money you’ll have to live on every month. When you retire you will need a plan to ensure that you have enough income to ensure you can live out your life in comfort.
A pension annuity is a product that pays you a regular income for the rest of your life, no matter how long you live. Depending on the annuity that you buy, this can be a fixed amount or increase annually.
How much you will receive will depend on the annuity rates offered by the insurance companies that offer the products. There are various factors that will affect the amount that you will receive:
- The size of your pension
- Annuity rates when you purchase the product
- Lifestyle factors (age, health etc)
- The annuity features you choose
What should you consider about Pension Annuities?
There are various areas that you need to consider ahead of purchasing an annuity and it’s important to take advice, which is something we can help you with. Things to note:
- After you’ve purchased an annuity, and the cancellation period, it can’t be changed.
- Your health details matter; you must give us accurate information and it may provide you with a higher income.
- Any income above your personal allowance from your annuity is taxable. The rate of tax will depend on your circumstances.
- You may get back less in income than the value of the pension pot that you use to buy the Pension Annuity, and there’s no cash-in / surender value.
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Pension Annuity Features:
Guaranteed Income for life. Completely worry free.
Can be a fixed or increasing income, either a fixed percentage or linked to the Retail Price Index (RPI)
You can choose to support your loved ones after you die. This can be linked to a guaranteed minimum payment period. Were you to die within the minimum payment period the annuity would continue to pay out to a chosen beneficiary.
Other things to think about with Pension Annuities:
A pension annuity isn’t something that can be changed. Once the cancellation period ends, then the decision that you’ve made are permanent.
Depending on how long you live for, you might not get back as much as you paid for the Pension Annuity product
The income is taxable, depending on your total income above your personal allowance will depend how much tax you will pay.
Once you’ve purchased the annuity, there is no cash-in value.
Is a Pension Annuity the right product for your circumstances?
Once you’ve read through the information on this page, and you’re considering if a pension annuity is the right product for you, there are some final things to think about:
Are you elible? – You have to be over 55 years’ old.
Do you want security? – A pension annuity provides a guaranteed income for the rest of your life
You want to provide for your loved ones? – You can pick a product which will leave some income for your dependents.
Have some health issues? – You may qualify for an increased income from an ‘enhanced annuity’ product
If you’re interested to discuss your pension and pension annuity options further, please call us on 01732 617 950 to book a free initial consultation.
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Retirement Planning Tools and Services:
- Be sure to download our free guides on pensions and retirement planning here
- Calculate your pension income options with our pension calculator here
- To find out if your pension is going to provide you with the lifestyle you desire upon retirement, get a review from our experienced financial adviser, by requesting a call back here
A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.