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Introduction to annuities

Purchase a regular income for the rest of your life

At your retirement you have a number of options open to you with regard as to how you commute your pension pot. One of the options open to you is to purchase an annuity with all or just part of your pension pot.

An annuity is a contract that pays an agreed regular income for as long as you live. They are provided by large financial institutions and require a lump sum payment to set them up.

If you do decide to opt to purchase an annuity most people start with their current pension provider.

HOWEVER, YOU ARE UNDER NO OBLIGATION TO PURCHASE AN ANNUITY FROM YOUR CURRENT PENSION PROVIDER.

The best approach is to obtain a quote from your current pension provider and compare it with other providers to ensure you are getting the best possible income from the annuity you finally decide to opt for.

We can help ensure you get the best possible income from an annuity as we are able to compare the entire annuity market.

What to consider when opting to take out an annuity

• Once you purchase an annuity the income agreed at the outset is guaranteed for the rest of your life regardless of any changes to your circumstances or market conditions.
• Annuity rates differ from provider to provider with recent research indicating variations can be as much as 40%. So, as already stated, it is important you compare annuity rates before making your final decision.
• Annuity rates are market driven. So if the market for fixed income is performing poorly with regard to income rates, annuity rates will reflect this. Moreover, rates do fluctuate so timing of your transaction is important. It is important you take financial advice before opting to purchase an annuity.
• Once you purchase an annuity you CANNOT change your mind.
• When you die you are unable to leave what may or may not be left in your annuity to your beneficiaries. This is due to what is called 'cross subsidy'. This helps to ensure the left over funds from ppolicy holders that die early go towards policy holders that live longer than anticipated by the annuity provider.
• Once you have decided upon an annuity provider and purchase the annuity you will be unable to change providers in the future. You will be bound to them for the life of the contract, or put another way, for the rest of your life.

If you are considering an annuity you will find there are so many questions that need to be answered. Let one of our experts in this field help you make one of the most important financial decisions you'll face. We are happy to bear the cost of your initial consultation giving you the chance to ask us questions on how you can make the right decisions for you.