What is an annuity?
An annuity provides you with a guaranteed income for life when you retire. You buy an annuity using a lump sum from your pension or, perhaps, some savings. Annuities remove the worry of having to budget for an unknown period of time.
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We can help you understand the retirement process and find the right annuity for you
Having successfully built up a pension fund during your working life there will come a time when you will need to make some important decisions about how to use this fund. These decisions involve how you intend to draw your pension income to ensure the benefits best suit your needs in retirement.
An annuity put simply is an arrangement whereby you buy an income from the pension funds that you have built up. The insurance company will provide an income for life in exchange for the money in your pension funds.
Many people mistakenly believe that they have to buy an annuity from the company to which they have been paying their pension contributions. This is not the case as you are able to shop around to find the insurance company which is prepared to offer the most competitive annuity rate. By doing this you will ensure your hard earned pension fund produces the highest income possible. This is commonly known as an Open Market Option.
The income you will receive varies depending on the number of options that you take and will depend on a number of factors such as:
1) The amount you have in your pension fund
2) Your age at the time you buy your annuity
3) Your state of health and life expectancy
The income that you receive from your annuity is classed as earned income and is subject to tax at your highest marginal rate. Once you have purchased an annuity these are paid for life. Any taxation and benefits are subject to your own personal circumstances are subject to change.
When it is time to retire, many providers suggest you contact an Independent offered from your existing provider is the best one on the market. At Susan Fleck Associates Ltd we can research all types of annuities and compare the rates for providers in the market. This could enhance the annuity you receive significantly. Also, if you have more than one arrangement you may qualify for an even better rate by bringing your plans together.
Please contact us in order to arrange a free consultation on 01622 688 851