Enhanced Annuity Rates
October 22, 2009
What is an Enhanced Annuity?
When a pension provider is looking to form a quotation for an annuity, one thing they will pay close attention ot is your life expectancy. There are series of contributory factors which make up how an annuity adviser will decide on how long you may live. These include where you live, your lifestyle habits, your general health and whether you are a smoker. In general, the earlier you are likely to die, the better rates you will be offered. Annuity advisers will only look at things that may reduce your life expectancy, as opposed to your actual quality of life. Each enhanced annuity quote will be done on a case-by-case basis, ensuring that the most accurate policy is then offered at the end of the process.
Smokers Annuity and Annuities
October 22, 2009
Smokers rates for annuities are a form of enhanced annuities but designed specifically for smokers. By choosing this kind of annuity you should receive higher rates as you will more than likely have a shorter life expectancy.
If you have been a heavy smoker for over the last decade (more than 10 a day) pension providers will enhance the rates on offer. These can be up to one third more than a standard annuity rate. These enhanced rates will be higher, the older you are – the maximum enhancement will be around 30-40% higher to those who are aged 70 or older (known as annuity escalation).
Poor advice is costing UK pensioners money, says new report
October 22, 2009
Data revealed by pension advisor Annuity Direct has shown that as many as one in seven pensioners could incur financial penalties due to poor advice that they have been given. In response to these findings, the company have called on the FSA to extend the advice given to pensioners about switching financial products
Buy a Pension Annuity now before rates fall, warn experts
October 20, 2009
Leading pension experts have this week advised those approaching retirement age should lock in the gains made on the stock market by purchasing an annuity, before the rates fall again. There have been big rises in the UK equity and managed funds which have increased 47 per cent and 31 per cent since March of this year. However, stock market analysts say that the gains made could be lost and that now might be the correct time to lock in the gains made by acquiring an annuity product.
Short Guide to a Purchased Life Annuity
October 19, 2009
What is a PLA (Purchased Life Annuity) ?
Put simply a Purchased Life Annuity is any annuity that is based upon your life expectancy, and cannot be classified under any of the other annuity types. The annuity rate offered will be judged upon how old you are when you take out the plan, your life expectancy and gilt yields. So if you are looking for a guaranteed income from a lump sum, a Purchased Life Annuity could be the answer. Because part of the income you get from a PLA is tax free, it is a tax-efficient way to receive benefits from your pension pot. With a PLA you will get an income for the rest of your life, meaning you won’t have to worry about your income running out when you are older.
Also with a Purchased Life Annuity, it may be possible to stipulate that you require an income for a set period of time – as opposed to your actual retirement length. However it should be noted that if you die before this period, payments will cease to be made. The way to get round this scenario is to ensure you gave what is known as “capital protection” – this means that if you have not yet been given payments before tax equal to the amount you originally invested, the balance will be returned if you die before the end of the span of the PLA.
What is Phased Drawdown?
October 18, 2009
The Phased Drawdown option was created for those who retire in stages, e/g those people who do not go from full time employment to not working at all for example. The scheme allows you to withdraw cash tax free as well as leaving money tied up in investments, much as you would with income drawdown. When you need more money from the scheme, you can withdraw it, allowing you to access money that would otherwise be invested. There are also greater death benefits using this options, as it can reduce the amount of income tax that will then be payable.
SIPPS – “Self Invested Pension Plan”- Explained
October 18, 2009
SIPPS – Explained
A SIPP, an abbreviation of Self Invested Pension Plan, is a method for people to take a much more active role in their investments and access a much greater number of investment opportunities than if the fund was managed by a pension company. Subject to rules governed by HMRC, you become much more heavily involved in the decisions over where your pension fund is invested and can even borrow money to help fund investments. These could include the stock market, fine wine, residential property as well as commercial property, whichever you deem to be the most appropriate. If you feel you have a keen eye for investments and you are willing to undertake the risk element, a SIPP could be the most suitable option for you when you reach retirement age.
A SIPP can be set up by using an existing fund, by making contributions, or by using a combination of the two. Employers are also able to contribute towards a SIPP. You can make one off payments as well as regular payments into your SIPP. They are generally suited to people with larger than average pension pots. They allow you to take income from your pension is a variety of ways. The first is to take a direct income from your pension fund, called an unsecured pension or income drawdown. This means you will not be locked into an annuity rate, allowing you to take advantage of possible higher rates in the future. As well as this the rest of your fund (what’s left after you withdraw the benefits) stays invested and thus can accrue in value, should the investments perform. But you should be aware that investments can go down instead of up and so locking yourself into an annuity rate may turn out to be the best idea.
Rush to buy Pension Annuities as new EU rules come into force
October 16, 2009
Retirees who are finishing their working career are flocking to buy pension annuities before rates fall, pension experts have found. New EU rules that will soon come into affect, coupled with a collapse in the bond market has increased demand further. annuity rates are expected to fall soon as insurers and providers start to factor in the costs of the dramatic fall in bond yields over recent months.
A Guide to an Unsecured Pension
October 15, 2009
What is an Unsecured Pension?
Buying an unsecured pension is often a popular other alternative to purchasing a lifetime annuity. An unsecured pension can also be quoted as Income drawdown, pension drawdown, or simply drawdown. Although the product varies in name, the principal is the same that you can withdraw from the the fund whilst it remains invested. They are generally used with pension pots of over £100k. There is no minimum amount that can be withdrawn, but the maximum is 120% of the level lifetime annuity payable to a single person of your age and sex. What is left over after you withdraw can be utilised to purchase a lifetime annuity at any point.
The USP is open to anyone who is currently paying into a personal or stakeholder pension scheme. Be warned though, some schemes will not operate a USP on smaller pension pots. Those who are in an “occupational money purchase scheme” could be eligible for a USP, should the scheme allow. If your employers pension scheme does not allow for a USP you must transfer the rights over into a different pension scheme. However you may have to forgo certain guarantees an entitlements, such as being able to get a cash free lump sum greater than a quarter of the value of the fund. This is a good way of accessing an income from your pension fund, while the rest of the money stays invested.
Introduction to the Open Market option for Pension Annuities
October 12, 2009
The pension annuity “open market” option can be defined as being able to shop around a variety of providers for the best annuity deal. Around 300,000 people retire each year in the UK, but it is estimated that around 66% of those do not bother to shop around the find the best deal. The open market option was born out the Finance Act of 1978. Anyone who wishes to take it up must do so before taking anything from their current pension provider, (annuity payment or lump sum for example)