Annuity Rates
Annuities: Why shop around for the best annuity rates?
If you are nearing retirement, you may be starting to worry about your pension policy and annuities. Whatever pension products you have invested in over the years, what kind of lifestyle are they going to enable you to afford when you stop working?
Does the idea of a guaranteed retirement income sound appealing?
Many people find that they retire in the prime of life and are fit, health and active well into old age. This is your time: time to do what you want and enjoy life and there is no reason to spend it worrying about money.
It is therefore essential to start shopping around for retirement annuities. Picking the best annuity rates could make your pension go further both in terms of monthly payments, and the time over which you can receive payouts from your pension products. There is an enormous difference between the worst pension annuity rates and the best.
An independent financial adviser (IFA) can help to find you the best annuity quotes from the range of annuities available on the open market. If you want to do some shopping around yourself, you can use the annuity supermarket annuities calculator as a starting point. Simply fill in your details and we will request annuity quotes for you and then let you know which annuity providers are offering the best options.
You can also use our annuity rates table to see how much you might get and to explore the current best annuity rates.
What exactly are annuities?
Annuities are basically a way that you can protect your lifestyle after you retire, no matter how long you live.
An annuity converts a lump sum, which is usually a retirement fund or pension lump sum, into a regular guaranteed retirement income that will last for the rest of your life. No matter what.
Your income from annuity is taxable and the amount that you get each year will depend on the size of your initial annuity lump sum. It will also vary according to the best annuity rates the annuity company or annuities provider offers, your gender, age and health, and the type of annuity that you opt for.
You can take advantage of our annuities calculator to get an idea of how much retirement income you are likely to generate. If you are lucky enough to have had one of the with profits pensions funds, and you choose a good annuity provider, you could be pleasantly surprised at just how much income you could benefit from.
You are allowed to take up to a quarter of your pension fund as a tax-free lump sum and put this straight into a pension annuity. You can then usually convert your entire remaining pension fund into an annuity for retirement before your 75th birthday.
Which annuity is the best annuity?
Many people opt for a conventional lifetime annuity or a level annuity. These give you a regular income that stays the same each year; it will not rise with inflation. Several other possibilities are worth considering to protect you from rising prices and the forecasted increases in the cost of living. Retirement annuities that give some of the best annuity rates also include:
- Increasing annuities. These can provide an income that rises each year, mirroring inflation, for the rest of your life. Or they can rise by a specific percentage each year.
- Guaranteed annuities. These continue to pay an annuity income for a specified period to someone that you nominate, if you were to die relatively soon after retiring.
- Joint-life annuities. A joint life annuity gives your partner some or all of your continuing income if they outlive you.
- Investment-linked annuities. People who have had with profits pensions and who have ended up with a larger pension fund may prefer to invest it in the stock market. This means that your annual annuity income could go down as well as up.
Your personal annuity supermarket checklist
Follow these tips to get the best pension annuity rates:
- Make the right choice for you. Shop around for the best annuity rates using the open market option and don’t just accept the first quote you are offered.
- Get good advice. It is important to talk to an independent financial adviser who specialises in pension annuities before you make your decision.
- Think about inflation. Get an inflation-proof annuity by choosing a product that will give you increasing pay-outs in line with price rises. Although you’ll start off with a lower annuity income than if you’d chosen a level rate, you will see your income keep pace with prices.
