Our team of annuity "insiders" will help you. We will search the annuity providers' systems using specialist software aiming to ensure that we get you the highest income possible. We can also help you with alternatives to annuities such as income drawdown.
A selection of our annuity and pension drawdown providers:
Pension Annuities: The Open Market OptionThe Open Market Option allows you to shop around for different options to convert your pension fund into an annuity. You do not have to accept the rate offered by your pension provider.
You could achieve more income from a pension annuity than you might think. The Financial Conduct Authority (FCA) say "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 through the open market."
A UK government research study showed that sixty percent of pension annuity claimants do not use their Open Market Option and forty percent of information packs sent from pension companies did not advertise the option clearly.
Many still don't use their Open Market OptionThis is not just because they are unaware of the benefits of doing so, but they do not actually realise they have this option.It has been claimed that retirees who do not use their option, taking the default annuity offered by their pension provider may be missing out on up to forty percent more annual income.
According to the professional pensions publication, DC World, it's estimated that over one billion pounds in pensions was lost by the failure to get proper advice on the best-selling pension annuity.
To make the most of the Open Market Option it's essential that you speak to a financial specialist who will explain the different retirement options available.
Enhanced / Impaired AnnuitiesAre you in advanced years, a smoker or have impaired health? If so, you may be able to increase your annuity income.
If you've a health problem, no matter how small or insignificant you think it is, you may be able to receive extra annuity income.It's very importnat that you tell our team of annuity specialists about it. You'll stand a much better chance of a higher income for the rest of your life. This is also the case if you smoke 10 or more manufactured cigarettes or use 85mg of rolling tobacco a day.
You may be in relatively good health, but a seemingly unimportant condition or complaint may substantially increase your annual retirement income. Some think they have to suffer from a serious medical condition such as heart disease, cancer or stroke to receive extra annuity income - the reality is often surprisingly different.
The reason why some pension annuities, called "Enhanced Annuities" or "Impaired Annuities", pay more is because those in better health tend to live longer than average.Pension annuity providers therefore have to pay out more over the healthier person's remaining lifetime so their yearly income is usually lower. This is why it is crucial to report any ailment to your provider, no matter how small you think it is. It may get you a much higher rate of return.
In fact, if you've one of nearly 1500 health conditions, such as being overweight, asthma, high blood pressure, high cholesterol etc.
It has been estimated that up to 40% of the UK population could increase their annuity income with an "enhanced annuity".
Annuities for Smokers?If you're a smoker, annuity providers factor in that you are likely to pass away sooner than the average person who doesn't smoke. They therefore assume that they'll not be paying you your yearly income for as long. A presumed shorter lifespan means that being a smoker can increase the amount of income you receive from your annuity.
Additionally, higher annuity rates are sometimes given to people who have retired from certain occupations or people who live in certain parts of the country, based on postcode.
As a smoker, you may already be entitled to receive a higher annuity income, but also, dependent on your age, you may receive further enhanced rates of up to 30 percent above standard level annuity rates. For instance, if you would normally receive £1,000 per annum as a non-smoker, you might receive as much as £1,300 a year as an older smoker.
For the first time in your life, it is likely to actually pay to be older and in "bad" health!
Types of Pension AnnuityThere are a wide range of pension annuity options that can be selected when choosing an annuity scheme. The most widely used options are listed below.
Income is guaranteed to be paid until the death of the the annuitant, but it can also be modified to include any of the following options:
5 year guarantee - the annuity ceases at death of annuitant, or after 5 years, whichever is longer
10 year guarantee - the annuity ceases at death of annuitant, or after 10 years, whichever is longer
Joint life annuity - the annuity ceases on the death of the second of two named annuitants
If you choose a guaranteed payment period then your starting level of income will be lower.
Your annuity can either be paid at a fixed level or you can include an escalation at 3%, 5%, or at the % RPI (annual increase in retail price index). Therefore, you can choose to compensate for inflationary effects on your pension income. However the initial income level will be reduced if you choose escalation.
Spouse benefitsYour surviving spouse, registered partner or financial dependents can be protected after you pass on, by choosing one of the following options:
Reduction to half benefit,
reduction to two thirds benefit or
The annuity is thus adjusted to the new level at the demise of the annuity holder or, if selected, at the end of the guarantee period, and continues until the demise of the spouse.
To recap, after death, the annual income paid to your spouse, partner or financial dependents will be a proportion of the annual income you were getting just before you died. The proportion has to be chosen at the time when you take out your pension annuity.It can be for example, 100%, 66% or 50% of your annuity at the time of your death. A higher proportion will have a higher cost, your annuity income will therefore be lower.
What is a Purchased Life Annuity?A Purchased Life Annuity is an annuity purchased with your own funds, instead of a money purchase pension fund. It operates in the same way as a Compulsory Purchase Annuity, but it does have tax advantages.
The entire pension which you receive from a Compulsory Purchase Annuity is treated as taxable income in the way income from normal employment would be.However, when you buy a Purchased Life Annuity, that part of the annuity income, which is calculated as capital repayment to you, is tax-free. Only that part of your annuity income which is interest paid on your investment is taxable.
With similar annuity rates, the effect of this tax treatment of a Purchased Life Annuity, if you were a basic rate tax-payer, would be to increase your net income by approximately £200 per month, from a £200,000 investment.
Your annuity specialist can assist you in making optimum decisions for such investments, and would be happy to provide comparative illustrations of such options.
Why use a Financial Conduct Authority (FCA) registered broker?1. They may be able to get a better annuity deal than you are able to achieve by yourself.
2. They are more likely to have access to a wider range of annuity possibilities than you.
3. Due to their ongoing relationships with annuity providers, they may be better placed than you to overcome any problems that might arise with your application.
4. You will have an expert point of contact should anything go wrong or need addressing.
5. They work to a strict set of guidelines laid down by the Financial Conduct Authority (FCA) who regulate their policies and working methods.
6. Annuity brokers have got an interest in recommending the right product for your particular circumstances. They will not wish to fall foul of stringent FCA rules.
7. If you choose not to get FCA qualified broker annuity advice, you may not be able to get compensation through the Financial Services Compensation Scheme if you have a complaint about their recommendation in the future.
But What Actually is a Pension Annuity?Converting pension "savings" into income: A pension annuity is an arrangement where you make a lump-sum investment and from this investment you receive a guaranteed level of income for the rest of your life.Mostly, annuities are bought using funds held in money purchase pension schemes and are usually provided by insurance companies.
So basically an annuity converts a fund into income and that income will be paid to you until you die.
As stated, an annuity is designed to be payable for your lifetime, but it's possible to select a fixed period if purchasing an annuity with cash rather than pension funds.
When your pension fund reaches maturity, your pension provider will advise you of the fund value, general information about annuities and the level of annuity income you would receive.
You are then entitled to use your Open Market Option. This allows you to transfer the fund value to another annuity provider of your choice. This therefore enables you to take advantage of a higher annuity income which may be available from a different provider.
You are normally entitled to take up to 25% of your pension fund as tax-free cash. Your annuity will be treated as pension income under the "Pay-as-you-Earn" tax regime.
This could be the largest financial decision you will ever make, so ensure that you maximise your income. Once you buy an annuity, you can't change your mind. You need to make sure you get it right first time.
Pension Annuity Payment OptionsYou can choose when and how you have your annuity income paid:
You can receive it in advance at the start of the payment period or in arrears at the end of the payment period.
Income Drawdown/Pension Release
As an alternative to an immediate annuity purchase, you can choose to release your pension funds using income drawdown .
Pension income help is at handA professional financial specialist will compare annuity rates helping you to ensure that you maximise your pension income. They will also explain what other options are available to you such as income drawdown, advise on transferring existing pensions and on investing your tax free pension cash. They'll help with the forms to ensure that your paperwork is processed quickly, smoothly and efficiently.
It's a simple process, start now...There's absolutely no obligation to proceed.Our enhanced annuity specialists will provide comparisons FREE OF CHARGE and also help you with annuity alternatives such as income drawdown.