Pension Annuities

What are pension annuities?

Pension annuities are annuities bought with the lump sum provided by a pension fund. You are allowed to take up to 25% of your pension fund as a tax-free lump sum on retirement, but you are obliged to invest the rest in a pension annuity to provide you with an income throughout your retirement.

You are not obliged to take your pension annuity with the same company with whom you saved for your pension. You can combine several different pensions, from different employers, into a single pension annuity fund.

Pension annuities give you a guaranteed income for the rest of your life, but once you have decided on the right pension annuities options for you, you cannot change, even if your circumstances change.

Your pension annuity options

There are many options to choose from when selecting your pension annuity, some of which may affect your pension annuity rates:

• Choose when you are paid – you can choose to receive your pension annuity income monthly, quarterly, half-yearly or annually, either in advance or in arrears.
• Choose level or increasing payments – you can choose to receive the same pension annuity income every year, or you can agree a set percentage rise. Alternatively, you can index link pension annuities to rise in line with inflation.
• Choose a guaranteed payment period – you can choose to let your pension annuity die with you, or you can agree a set minimum period, for example 10 years, during which payment is guaranteed, even if you die.
• Choose payments for your spouse – you can set pension annuities to continue to pay some or all of your pension annuity income to your spouse or partner after your death.

Best pension annuities rates

Naturally, options, such as pension annuities with payments for your spouse or increasing payments over time, will need to be funded from your initial investment, so they will reduce your initial pension annuity payments. That said, if you do not take out a guaranteed pension annuity and die sooner than expected, your dependents could lose out on a significant sum.

Finding the best pension annuities for you involves balancing all these options to find the pension annuity that suits your own personal circumstances and delivers the highest pension annuity rates. Annuities4U are experts at assessing your unique needs and finding the best pension annuities rates for you from hundreds of pension annuity providers.

Check our pension annuity calculator today to see what options are available to you and how these options will affect your pension annuities rates.