TAKING YOUR PENSION ANNUITY

Guide to taking your pension annuity
Having successfully built up a pension fund during your working life, there will come a time when you will need to make some important decisions about how to use this fund. These decisions involve how you intend to draw your pension income to ensure the benefits best suit your needs in retirement. It is normal for people who are retiring to convert a portion of their pension fund into a tax-free lump sum with the balance used to purchase an annuity.

What is an Annuity
An annuity is a regular income paid to you. It is normally paid monthly, although you could choose a different frequency such as quarterly, half yearly or annually if this suits your needs better. Pension annuities are normally payable from the time you retire and are paid throughout the rest of your life.
It is possible for your Pension Annuity to continue after your death and be payable throughout the life of your spouse or other dependent. This is known as a joint life annuity.
It is also possible for the income payable to you or to your dependants to increase each year either at a fixed rate or perhaps in line with inflation. This is known as pension escalation.
Your pension annuity is purchased with the money held within your Pension Fund at the time of retirement.

Do I have to buy my annuity from my existing provider
Even where you have been making regular payments into a pension policy with an Insurance Company, you should still consider how much pension income your fund could buy from another Insurance company in comparison to the annuity available from your existing Pension Provider. This comparison should be made regardless of how successful the existing Insurance Company has been with the investment of your money during the period before your retirement.
Good investment performance within a pension policy before retirement, does not guarantee that any annuity rates offered by the same Insurance Company will be the most competitive in the market place.

The majority of pension plans allow the value of the fund to be used to purchase an annuity from any authorised UK Pension Annuity provider. Any existing pension fund built up within the policy can be passed across to the new annuity provider. This is known as an Open Market Option (sometimes referred to as an OMO).
If your pension policy provides an OMO it will be possible for you to purchase an annuity from the Insurance Company of your choice. This allows you to obtain the most competitive annuity available at the time of your retirement. Your Independent Financial Adviser can undertake the process of finding the most competitive annuity provider for your needs.

If you would like advice on taking your pension and help to find the best annuity provider please complete the call me back form and a pension specialist will contact you.

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