What is an Annuity?

Easy to understand facts about annuities

What is an Annuity?

Annuities have been an integral part of the pension system for millions of people for generations. An annuity is a retirement ¬†income available for the retiree’s remaining life. With some options there a provisions for partners and dependents.

When you retire you can take a 25% lump sum completely tax free, the remaining amount in your savings pot can be used to buy an annuity. You can buy an annuity any time from the age of 55. It’s important to note that income paid from an annuity is subject to tax laws and income thresholds. The income you receive from an annuity in addition to your state pension and any other sources of income and benefits are evaluated as a whole.

The different types of annuity

Single Life Annuity

Just pays you

Joint Life Annuity

Pays you and your partner until death

Enhanced Annuity

For persons with a shorter life expectancy

Fixed Term Annuity

Guaranteed income over set period, remaining pot can be used afterwards for pension or another annuity


Are there any risks involved?

Annuities are often referred to as a one shot deal; once they have been entered into, the rate and income values are usually fixed until the end of your life.

There are types of annuities that do have flexibility such as Fixed term and invested (with profit) annuities.

There are also options for people with shorter life expectancies, people who smoker, are obese and who drink higher quantities of alcohol, these schemes are referred to as enhanced annuities.

Do I need one?

An annuity is worth considering if your thoughts match any of the following:

green-arrowYou want a guaranteed income for the rest of your life

green-arrowYou would like the income to rise with inflation

green-arrowYou want your retirement income to be protected from stock market fluctuations

green-arrowYour health is poor and you want to qualify for higher income

Want more information?

Retirement options should never be decided on a whim, they deserve careful consideration. We believe that all our customers should receive the same service and options that we ourselves want in our retirement. If you’re unsure about what is right for you, or you simply want further information to help you make the right decision please talk to us.

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