What is a Pension Annuity?
Pension Annuities – what EXACTLY are they?
Put simply, when you retire and buy an annuity, you are allowed to take up to 25% of your pension fund as a tax-free lump sum straight away. The remaining 75% must be used to provide you with an income for your retirement. Pension annuities are provided by the major insurance companies in the UK.
Usually, your current pension provider will provide this for you, however, very importantly, each individual has the right to exercise their open market option, which means you can shop around for your annuity to make sure you get the best package for you!
This isn’t like shopping around for car insurance, where you might choose to leave it. This could be the most important decision you ever make as it will affect your entire retirement, so it’s imperative that you do exercise this right and shop around.