What is an annuity?
An annuity is a sensible way to make the most of your pension pot - converting the money you have saved into a guaranteed income paid on a regular basis for the rest of your life.
To qualify for the regular income from an annuity, you have to be aged between 55 and 75.
Often, the company you have built your pension fund with will offer to convert this into an annuity on your behalf. However, rarely will they offer you the best deal and you have every right to compare the annuity market to find a much higher guaranteed regular income.
What is an enhanced annuity?
Certain aspects of one's lifestyle or health condition may contribute to a lower life expectancy. These conditions may only be minor considerations such as smoking, a high Body Mass Index, regular drinking or health complications such as high blood pressure.
Such conditions may well qualify you to receive an enhanced annuity - accessing a higher regular income in exchange for the same pension savings lump sum.
Responsible Annuities can help you to determine whether you may be eligible for an enhanced annuity and if so, can help you determine exactly how much extra income you are eligible for as a result of your health or lifestyle consideration.
What are the types of annuity?
Now you know what an annuity is, it is important to know the differences between the types of annuity on offer in the marketplace.
A lifetime annuity is the most typical, where you exchange your cash pension fund for a secure income for the rest of your life.
You will have a few choices as to how the income comes in. You may opt for a fixed income set out at the start. You may want to increase the amount you receive over time to tie-in with your expectations of inflation or future retirement plans - such as a change of location, activity or house type.
Another type of annuity is an investment annuity. This is where the amount you receive on a monthly basis is linked to the performance of the stock market - usually the FTSE 100. It can be an uncertain way of planning your retirement.
What Are My Annuity Options?
We have established the benefit of an annuity comparison service, making sure you look further your pension providers offerings. What's next is to know what particular factors may affect the amount you receive, aside from whether you qualify for an enhanced annuity or not.
How often would you like to receive your regular payments?
Generally, the longer it is between the payments you receive, the larger sum of money you are entitled to. You have a choice between receiving your income on a monthly basis, quartlery basis, 6 monthly basis or a yearly basis.
If you like to manage your own money and feel you could use a larger income to play with, it would be sensible to go for a longer term payment annuity, 6 monthly or yearly.
If you would prefer your money to arrive on a more regular basis, without having to plan and strategise how to make your money last, then a monthly or quarterly payment annuity may be more to your liking.
Again, this is something we would be happy to discuss with you to work out the optimum for your circumstances.
Will this annuity be a combined annuity for you and your partner or is it just for you?
With certain annuities, you can choose for the payment to be larger, but for it to stop paying out in the event of you passing on. Alternatively, you can choose for the payment to continue to your partner should you pass away before they do.