Kevin Mills
Choose the best Annuity for you
Issues which need to be considered when buying a conventional annuity
What should you do if you are able to take benefits from your pensions? These days, when you receive your retirement illustration from the insurance company it will tell you to seek independent financial advice because you should look at the “Open Market Option”. Even at a basic level annuity rates vary from each provider. You may be able to get a better annuity (income for life) from another insurance company.
On top of this decisions will need to be made now about the type of annuity which suits you best. Do you want it to provide an income for your spouse after your death? Do you want the income to be guaranteed for a period even if you die unexpectedly soon?
A big conundrum is how to protect your retirement income against inflation. There is a cost if you need to do this through your pension. For a sixty year old man with normal life expectancy a level annuity is likely to be in the region of 6.25%. An annuity increasing by 3%pa is likely to be in the region of 4.4%. So if your pension pot is £50,000, after taking the tax free cash, these figures translate to £3,125pa against £2,200 pa. It will take about 14 years for the escalating pension to catch up with the level pension.
As you can see, even for straight forward annuities there are issues which need to be thought through carefully. You may feel that a conventional annuity is not your best option read about other Annuities.
The above does not constitute advice. It is essential to seek independent financial advice when choosing the annuity which is right for you, use our contact page to request a initial consultation without charge or obligation.