If you are unsure about which pension annuity to buy, you may benefit from reading our annuity FAQ’s below. There is a myriad of information regarding pension annuities, which is why we recommend you seek the assistance of a Independent Financial Adviser. However if you just want some basic information about pension annuities, take a look at the short introductory guide below or visit our pension options page.
When can I buy a Pension Annuity?
In the main, most people tend to purchase an annuity between their 50th and 75th birthdays, with 75 being the absolute latest purchase age. The income you get from an annuity will depend on a number of factors such as how old you are at purchase date, your current state of health (as well as previous medical conditions) and whether you are male or female. The general rule of thumb is that the older you are at purchase date, the more money will be paid out as an income from an annuity. Aside from these factors, your geographic location may also be a consideration for pension providers.
How does my health affect my Pension Annuity payment?
Your state of health will impact on the amount that you will receive from an annuity. If you have a medical condition that impacts on your life expectancy, or if you smoke heavily or suffer from obesity, you may be eligible for enhanced or impaired life annuity. You may also qualify for enhanced rates if you have had medical conditions in the past.
How does gender impact on rates?
This calculation is based on the simple fact that on average, women live longer than men and so are offered lower rates.
Husband / Wife / Partner pensions?
Should you want your husband, wife or partner to enjoy an income after you die, you will need to opt for a a joint life or last survivor annuity. The amount you get as an income will be lower had you bought a single life annuity, but will ensure your partner will get an income should you pass away. You can choose just how much of your annuity income you want your partner to receive starting at 100%. Remember the more you set aside for your partner after your death, the less you will receive yourself.
Where can I buy an annuity?
Pension annuities are available from insurers as well as banks. Remember that you don’t have to accept what is offered from your current provider you can shop around and use what is known as the “open market” option.
Do I have to use all of my pension fund to buy an annuity?
Not at all. You can use part of your fund as a cash free lump sum for you to use as soon as you retire.
How long does buying an annuity take?
This will depend on how long your current pension provider takes to move the money to the account of the chosen annuity provider. It can take anywhere between one week and three months, but on average takes 30 days.
What changes can I make to my annuity?
You can make changes to your name / address etc but you cannot change the actual terms of the annuity once it has been signed for. This is why it is imperative to make sure you have the best product to suit you before you sign the contract.
How safe is an annuity?
An annuity is generally a safe bet. In any case they are all covered by the Financial Services Compensation Scheme (FSCS).
Define the Guarantee period
The guarantee period is the time where you will be assured of receiving an income from your annuity. Should the annuitant pass away, the money will be paid to the annuitant beneficiary for the equivalent period.
What is the surrender fee / charge?
If you withdraw money form your annuity funds before the provider has made a profit you will be chagred a surrender charge.