Annuities are typically provided by insurance companies. At retirement you have the option to shop around to get the best deal. This is called the Open Market Option. It pays to shop around because your pension fund provider won’t necessarily give you the best income on your annuity – and by staying loyal to them you could lose out by several thousand pounds.

Throughout our website you will find information on annuities and if you require any further advice, fill out the free no obligation quotation enquiry form and a specialist Financial Advisor will be in touch in order to find you better quotations and annuity rates out there on the market and to answer any questions or queries you may have.

Remember our quotation service is FREE with absolutely NO obligation. 

Unfortunately not. The income from your pension annuity will be taxed as earned income under the PAYE scheme. Tax is deducted by the annuity provider before you receive your income. There is no liability to pay national insurance. On retirement, it’s important to send in your original P45 to the insurance company. If not, your provider will set up the annuity on a temporary tax code until they receive the correct tax code from HM Revenue & Customs.

Yes. The good news is that when you retire, you can normally take up to 25% of your total pension fund as a lump sum. The lump sum is tax free – whereas income received from a pension is taxable. You can spend this money however you wish – which gives you more options than if you took the money as regular income.

Please remember though, that if you take a lump sum from your pension it will reduce the amount of money left to provide you with your income in retirement. If you do decide to withdraw cash from your pension, you should consider carefully how you will use the money, including whether or not to invest some or all of it to supplement your annuity income.

Annuities are a very secure and stable source of income in retirement. The main risk comes from continued improvements in life expectancy – because even though your income is guaranteed for the rest of your life, the longer you live, the less your money will buy due to the effects of inflation.

Annuities also come with built-in security against the risk of poor fund management by the insurance company. The Financial Services Authority (FSA) requires insurance companies to keep a minimum level of reserves above their liabilities to help prevent insolvency. This acts as a safety net and provides added security.

As an annuity policyholder, you will also be protected by the Financial Services Compensation Scheme (FSCS). This means that should an insurance company cease trading, you will qualify for compensation. The FSCS gives you unlimited financial protection, calculated as 90% of the claim. This will cover the value of the annuity and will also include any features you have built into the annuity, such as the level of spouse’s benefits and inflation cover. For further details of the FSCS please visit www.fscs.org.uk or contact them on 020 7892 7300.

If you have more than one pension fund you can treat them independently for retirement income. For example, you could take benefits from one pension whilst leaving another invested. However, it pays to check whether better annuity rates are available for bigger funds. If so, it may be in your best interests to combine your pensions.

Fill out the no obligation enquiry form and a specialist Financial Advisor will be in touch in order to find you better quotations and annuity rates out there on the market and to answer any questions or queries you may have.

Remember our quotation service is FREE with absolutely NO obligation.