Having saved in a pension scheme during your working life  when you decide to retire you will usually need to buy a Lifetime Annuity if you have one of the following pensions.

  • Personal Pension(PP)
  • Stakeholder Pension(SP)
  • Group Personal Pension (GPP)
  • Additional Voluntary Contribution (AVC) 
  • Free Standing Additional Voluntary Contribution (FSAVC) 
  • Section 32 Policy (S32)
  • Retirement Annuity Contract (RAC) 

OPEN MARKET OPTION (OMO)

By exercising this option you may be able to get a better annuity rate by shopping around. You should check what your provider is offering you and then compare this with the annuities on offer with other providers. A recent Financial Services Authority (FSA) report stated that up to a 20% improvement is available when comparing the best and worst annuity providers.

If you have an Occupational Money Purchase Pension,the trustees of the scheme may buy your annuity for you. However you have the option to make the choice to shop around yourselve using the Open Market Option. 

WHAT IS A LIFETIME ANNUITY 

Buying a Lifetime Annuity means that you are converting your pension fund into an income paid for the rest of your life.

Your existing pension provider will usually offer you a lifetime annuity, but you can shop around to see what rates or arrangements other insurance providers offer.

Types of Annuity 

CONVENTIONAL ANNUITY

Is designed to allow you to use the retirement fund from your personal pension(s) or retirement annuity policies to buy immediate income to suit your needs.

It offers a range of options that include increasing your pension payments or establishing payments that will be guaranteed for a number of years, as agreed by you. There is no investment risk as the fund available for the purchase buys on the day it is vested and guarantees to pay for life and the rate set.

ENHANCED ANNUITY

Will pay a higher annuity income under certain conditions. These are based on lifestyle or previous occupations or people who live in certain parts of the country.

IMPAIRED - LIFE ANNUITY  

Will pay higher annuity income if you have certain medical conditions that are likely to mean you have the potential of a shorter life expectancy than the average.

WITH - PROFIT ANNUITY

You receive a regular income for life. The investment performance of the underlying fund is reflected in the bonus the annuity provider declares each year. This helps to smooth out the ups and downs in the investment return.

UNIT - LINKED ANNUITY

You receive a regular income that is directly dependant on the investment returns of the chosen funds. This means that the income can go up or down depending upon the performance of the underlying investment. It is slightly risker option but does have the potential for growth that either a Conventional Annuity or a With Profits Annuity.

TEMPORARY ANNUITY 

This is an annuity bought for a fixed term,usually with a minimum of five years and a maximum of the period until age 75 is reached. The annuity income is set for this period and at the end of the period a pre-determined sum is available. This can then be used to purchase another Temporary Annuity, or a Lifetime Annuity or for Income Drawdown. 

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The above is a summary to highlight the main obtions available to most people approaching or about to retire.

In order to make sure you have looked at all the potential retirement benefits  available to you and also to choose a pension that is tailored to meet your personal circumstances.

We would strongly advise that you come and have a consultation with our qualified advisers to provide you with the best possible retirement solutions.  

Call: 01983 811505 for an initial interview with no obligation 

E-Mail: ifa@wardhousefinancialservices.com

Fax: 01983 811095

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