Pension Annuity Calculator

The very simple and uncomplicated pension annuity calculator will help you find the best annuity rates on the open market option. Remember you do not have to buy your annuity from your existing annuity provider you can shop around to find better annuity rates.

How can a pension annuity calculator help?

These calculators allow you to keep quoting and demonstrate what happens to the income when you change the options that are available with an annuity. For example if you had a £75,000 pension fund and you intially used the pension annuity calculator on level income, no guarantee, no spouse pension and no poor health issues. The pension annuity calculator would return the results for your pension fund size. If you wanted to see what affect changing the guarantee to 10 years would have on the income then it is a very simple process of changing that field in the calculator, press calculate and you would get an instant result. That simple which is why many people use them.

Alternatives to annuities

What are the alternatives to annuities at retirement? Well there are a number of options that you could consider. Firstly there are guaranteed annuities to consider or invested annuities. Then there is unsecured pension which is also more familiarly know as income drawdown.

Annuity Options

If you take a guaranteed annuity then you basically get what it says on the tin, a guaranteed annuity, which means that the income that you get is guaranteed for the rest of your life. If you choose an escalating income then it is still guaranteed for the rest of your life. With both of these what it means is the income cannot fall. With an invested annuity the income is not guaranteed, it can go up or down depending on how the underlying investments perform. Hence normally these type of products are bought by annuitants that have additional income income from other sources.

Unsecured Pension (Income Drawdown)

Many people that reach retirement do not want an income initially and therefore they go into income drawdown. With income drawdown you can take your tax free cash and leave the remainder of the fund invested. Again the reason it is called unsecured is that the underlying investments can rise and fall, which means that income can fall.

The options at retirement should be discussed with a qualified independent financial adviser and preferably a specialist in retirement options.

Enhanced Annuities – Do You Qualify?

We are often asked this question. The simple answer is that around 40% of people who purchase an annuity at retirement could qualify for enhanced annuities. Some reports suggest it could even be as high as 60% that could qualify.

How do you find out if you qualify for Enhanced Annuities?

Ideally you need to consult with an independent annuity specialist. The specialist will complete a medical information form that asks questions about the medication you may be taking, the number of units of alcohol that you consume, your height and weight and also if you have been hospitalised for any medical conditions. The information collected will allow the annuity specialist to check if you qualify for enhanced annuities. The difference to your income could be quite significant if you do qualify for enhanced annuities.

Do I have to go for a medical?

The answer to this question is normally ‘No’ , however, many of the annuity providers will write to your doctor or consultant to verify the information that you provided in the medical information form you completed to check if you qualify for enhanced annuities.

How long does it all take?

The majority of the annuity providers process your application immediately, they will do any checks they require while the application is being processed so there is no need to worry about a delay in your retirement income. Of course the difference in retirement income could be very significant if you do qualify for enhanced annuities so it would be worth the wait.

What is an annuity calculator and how it can help you find the best annuity rates

There is a big difference in the UK between insurance companies and their annuity rates and this is why you should use an annuity calculator to help you find the best annuity rates.

What is an annuity calculator?

It is simple piece of software that once you enter your details into the annuity calculator it runs off searching the whole internet to find the best annuity rates. What is does is save you an enormous amount of time checking each of the annuity providers individually. The annuity calculator then produces a table of rates with the best company at the top and the worst company at the bottom.

How does it help find the best annuity rates?

  • Everybody that gets an annuity quote wants different options
  • Considers guaranteed annuity rates
  • Considers your postcode that can give you better annuity rates
  • Checks if you qualify for enhanced annuity rates
  • If you smoke it comes back with annuity rates from companies that specialise in smoker annuity rates

These are just some of the advantages that an annuity calculator can give to help you get the best annuity rates. Because your income in retirement needs to last you a considerable time it is so important to ensure that you get the best rates on the open market and not just accept the rates that your current pension providers is giving you.

Finding the best annuity rates

There is a lot of confusion and panic once you reach retirement, a lot of organising to do to help you have that smooth transition into retirement. So the last thing you need to worry about at this time is how do you get the best annuity rates from your pension.

Once you reach retirement you need to switch your pension fund to an annuity, you may have had this pension for many years and now it is time to find the best annuity rates. The best place to start is the open market, everyone in the uk has the right to shop around on the open market to find the best annuity rates.

But, where do you start. Well usually the best place to start is an independent annuity specialist. Most of the firms in the uk that specialise in annuities have there own annuity desks. These desks are manned by consutants that normall have many years experience in the annuity market. They will search the entire market to find the best annuity rates for your individual circumstances.

The open market option was introduced so everyone had the right to shop around, there can be significant differences between the best and worst annuity rates from the pension providers.

Why you should Use a Specialised Annuity Desk

When shopping around for the best annuity it can be hard to know exactly who offers the best terms for you.  Speaking to someone who specialises in annuities and who has access to the whole of the market means that you will get the best income available for you, this can mean a significant uplift on the income being offered by your pension provider.  The desk staff will have knowledge of the different providers and sourcing systems which will ensure that the market is researched thoroughly.

Questions will be asked about lifestyle or medical history and this can make a difference to the annuity income you can achieve.  As annuity experts it is the job of the annuity desk to get you the maximum level of income available at the time of your retirement.  Specialist knowledge of the market and research tools should be able to confirm to you the top provider for your circumstances very quickly.  They also assist you with the paperwork which can often be confusing and importantly they deal with your current provider and the new provider to ensure that the transfer goes through as quickly and smoothly as possible.  This should leave you rest assured that you will be able to maximise the income available to you and ensure that the process is handled efficiently with no cost to yourself.

Advantages of Fixed Term Annuities

The problem with guaranteed annuities is that once you have bought them you cannot change them. You are stuck with the rates that were available at the time and also if you were fit and healthy at that time you will have bought your annuity rates based on fit and healthy annuity rates.

Yes you can buy all the usual options with guaranteed annuities such as guarantee period, escalation of payments each year, spouse pension to name a few, but the fact is you cannot change the annuity rate you bought. So what if you could? What advantage would that be?

Fixed term annuities are fairly new in the UK but have been around for many years in the US.

How do fixed term annuities work?

When you purchase a fixed term annuity you are purchasing the annuity rate for your age, sex and health at that time. At the end of the fixed term the annuity provider will give you a guaranteed fund and you can then purchase a new annuity for another fixed term, but this time your annuity rate will be based on your age, sex and health at that time. So for instance if your health has deteriorated then you could buy your annuity based on poor health rates and not fit and healthy rates.

Advantages of Guaranteed Annuities

When you reach retirement and what is supposed to be your longest holiday you want to ensure that when you exchange your pension for an annuity that the income is going to be looking after you for many years to come. That is why you probably need a guaranteed annuity.

So why a guaranteed annuity?

A Guaranteed Pension Annuity guarantees to pay you a regular income for life. When you purchase your annuity you’ll have the flexibility to choose whether your income stays the same throughout retirement, goes up each year by a fixed amount, or matches yearly changes in inflation by being linked to the Retail Prices Index (RPI).

When you are in retirement you do need the peace of mind that the income you have will not fall. There are many alternatives to the guaranteed annuity such as invested annuities or fixed term annuities but with these your income can alter each year, they also depend very much on performance of the underlying investments. The value of these investments can fall or if in with profits depend on bonuses added.

So in summary to be safe that your income will not fall in retirement you need to look at guaranteed annuities.

Getting Indpendent Financial Advice on Annuities

Given the increasing range of annuities and other available options at retirement, independent financial advice may be needed. This can be important for more complex retirement income options, such as phased retirement or income drawdown.

Employers can facilitate this by directing staff to an independent adviser or by subsidising advice. Local Partnerships can be formed with local independent financial advisers and on site visits can be made so staff do not need to lose much time from their workplace.

Staff should also understand how independent advice is paid for – either by an upfront fee or from commission on any products sold. Individuals may baulk at paying a fee themselves, but commission would come out of there pension fund. Although a lot of annuities providers do not take anything from the pension pot to pay the independent financial adviser.

In a contract-based scheme, the provider is responsible for communicating with deferred members. Although an employer may not be legally responsible, it may feel more comfortable if its DC provider takes its responsibilities to deferred members seriously.

Good corporate governance for members approaching retirement rests on employers taking their responsibilities seriously. By communicating and engaging with members, employers can help staff preserve their pension as they near retirement and make the right choices on taking an income.

Things to Know Before Going for With Profits Annuity

With profits annuity is a combined payment of an income for life and lifetime annuity with the potential of growth and providing some ongoing inflation protection.  This kind of investment though could be very risky due to fluctuation which depends on the investment performance.  One’s income is linked to a with profit fund and with a steady performance,  income growth also becomes steady.

Keep in mind that not all providers offer a with profit option and for companies that do, they usually will give their clients several schemes. The with profits annuity has its advantages and drawbacks. know what they are so you would know whether this is the best option for you or not.  Here are some of the advantages:

With a wise investment, you could have a steady income growth; profit is guaranteed and this is something that any investor wants. A with profits annuity will never go down a certain minimum level as the term gets longer. Another good thing about it is that you can have several options that can fit how much money you are able to invest.

While a possibility of a steady income could be considered an advantage, there are also possibilities of varying income. Your income could fall with a poor investment performance and that fluctuating income will be very hard to budget.

Another thing that you should not fail to know are the restriction and possible penalties of with profits annuity.

Your income could possible fall if the bonus rate is lower that what you have anticipated. When you have finally chosen the anticipated bonus rate, it cannot already be changed in most instances. With this, your income will always be based on rate achievements compared with the bonus rate selected.

Before you finally invest your money with a with profits annuity scheme, make sure that you perfectly understand the in and out.