ANNUITIES

If you have a Defined Contribution Pension Scheme, you have a number of different choices when you decide to start drawing your retirement benefits. One of these is to buy an annuity to provide you with a guaranteed income, either for the rest of your life or for a certain number of years.

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What Is An Annuity?

Annuities are retirement income products sold by insurance companies, you can use all of your pension fund or just some, to purchase an annuity and in return you will receive a regular taxable income.

Fixed Term Annuity

This type of annuity will pay you an income for a set period, usually 5-10 years. At the end of this term, you will receive a maturity amount, which can then be used to purchase another annuity or alternative pension product. You also have the option to take this maturity amount amount as cash.

Lifetime Annuity

These are the most common types of annuity, in exchange for your pension fund you can purchase a lifetime annuity which will provide you with a guaranteed income for life. If you choose to nominate a beneficiary, this income will continue to be paid to them upon your death.

How Much Income Will I Receive?
The income you will receive from your chosen annuity depends upon a number of factors such as;
  • Your health and lifestyle
  • The size of your pension fund
  • Annuity rates at the time of purchase
  • Your age at the time of purchase
  • The type of annuity, income options and features you choose

Things To Consider

Before deciding to purchase an annuity you can take up to a quarter (25%) of your pension fund as a Tax-Free cash lump sum. Annuity rates offered by a particular annuity will depend on the provider you choose and the options selected. Often these rates are lower than other pension options available to you upon retirement. Once you have purchased an annuity, it can be difficult and sometimes impossible to change it, therefore it is very important you choose the correct annuity with the most suitable options for your personal circumstances. We are happy to assist you further with any annuity queries you may have - simply click the link below.

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