Picking the best annuity rates could give your pension a significant lift. There are significant differencies in the worst and best annuities. An independent financial adviser (IFA) using an annuity calculator can get you the best annuity quotes from the range of annuities on the open market.
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Let us shop around to find the best annuity rates for you
Many people assume that they have to buy an annuity from the company that has held their pension. This is not the case, as you have the right to shop around for the best annuity rates when you retire – it’s called the Open Market Option (OMO). Worryingly, figures from the Association of British Insurers (ABI) show that 61 per cent of people who bought an annuity in 2007 did not shop around in this way.
Most people think that their pension annuity starts paying out automatically when they retire, but that is not how it works. It might sound confusing, but the retirement annuity that is paid from the pension fund that you have built up over the years is just a pot of money. The government says you must use your pot of money to but a pension annuity which will provide you with an income in retirement. This retirement annuity can be structured to suit your own particular circumstances and some of the options you can choose are listed below.
An annuity converts a lump sum (usually a pension fund) into a regular income that will last as long as you live. The income is taxable and the amount that you get each year will depend on the size of your fund, the best annuity rates the annuity company offers, your gender, age and health, and the type of annuity that you opt for. You are allowed to take up to a quarter of your pension fund as a tax-free lump sum and most convert all of your remaining pension fund into an annuity before the age of 75.
Which Annuity?
Most people opt for a conventional lifetime annuity, but there are several options to pick from. The best annuity rates can have the following options:
Checklist
Follow these tips to get the best annuity rates:
To get the best annuity rates using your open market option complete our online form opposite and we will send your annuity quotes