Annuities
What is an annuity?
It is a regular income paid in exchange for a lump sum. Usually most people buy an annuity when they take their pension.
In essence they are a simple product, with a few options. You amass a sum of money throughout your working life usually via a pension, then traditionally when you choose to retire you take your sum of money to a life company and ask "How much income are you going to guarantee to pay me for the rest of my life, no matter how long I live?"
Annuities offer absolute security, no other product does this, it is suggested that 17% of Britons alive today will live to 100 years old.
When buying your annuity you can ask them to add in a few options, such as: "How much if you pay my widow (or widower) some of the income after I'm dead, again for the rest of her/ his life?"
Other options include: "How much if you increase the income every year in line with inflation?"
Each option will reduce the basic income you would have received.
Annuities are a once and for all purchase, once you buy your annuity you can not change it, the sum you bought it with has gone!
Annuities, die with you, with the exception of widows benefit, and other special options.
The majority of people just accept the income quoted by their existing pension provider,however most of us have the right to shop around for the best annuity. This is called open market option. This means you don't have to take the pension offered by your pension provider, according the FCA's own consumer advice site. "..depending upon the provider you go to, you can increase your income by up to 20% just by shopping around."
DALES can do the 'shopping around' for you. We can check that using the open market option is the best thing for you to do, or whether your existing pension offers better value. We will usually check to see if you qualify for any enhanced annuities, due to your health or lifestyle. You can be sure that by consulting DALES we will get you the best income from your pension, and explain what all the options are and which ones suit your situation and needs.
The annuity comparison tool will show you the likely level of income you can expect, but remember as with all such tools, it is only a machine. It makes a basic assumption that you qualify for standard annuities, if your pension is an older contract (Retirement annuity contract) or an old company scheme (sections 32) you may not be able to access your open market option, if this is the case please call DALES, and we can assist you.
Alternatives to Annuities
There are a couple of alternatives to basic annuities, each one could be suitable dependent upon your circumstances, and particularly your appetite for risk. Asset backed annuities - an annuity with a potential to increase over time, dependent upon investment growth, Income drawdown and Phased retirement.
Call us now for your annuity quote: 01636 870 069
