Guaranteed Annuity

When you purchase a guaranteed annuity you purchase a fixed guaranteed annuity rate which other than if you add an option of indexation or escalation the annuity rates will not change. This for many retirees is the safest option there is at retirement. This is why guaranteed annuities are called secure pensions.

The single biggest worry for retirees is not having sufficient income to meet their everyday needs and fund emergencies. That is why guaranteed annuities are very popular. The fact is though that only one third of people that purchase an annuity do so using the open market option. The two thirds that do not use the open market option could be missing out on significant income for the rest of their lives.

Higher Annuity Rates With Guaranteed Annuity

To get higher annuity rates on your guaranteed annuity you just need to use the open market option. By using an annuity broker you could get as much as 60% more income for serious health conditions. Even for mild lifestyle conditions such as being over weight can add 10 to 15% onto your annuity rate.

So to get the best annuity rates find a good annuity broker and use your right to the open market option.

Best Annuity Rates – from the Open Market Option

The best annuity rates for your retirement years will probably be found by using the open market option. The open market option gives you the right to take your pension fund and search the entire annuityproviders to get the best annuity rates.

There are big differences between the worst pension you can get for your pension fund and the best pension you can get, these differences can be 15-20% which means you could be missing out on an extra 20% of income each month in retirement. So on a pension of £800 per month with the worst provider you might get £1,000 or more with the best provider. Not many people would want to throw that sort of money away.

It is always worth exploring the open market option to find the best annuity rates no matter what the size of your pension fund.

open market option

Best Annuity Quotes – From The Whole Market

When you want the best annuity quotes there is only one place to get them and that is the whole of market. The best annuity quotes can only be sourced by comparing all annuity providers.

No one annuity provider could ever give you the best annuity quotes for all circumstances, for example how could one provider quote for , men, women, young, old and all the options available. It would be impossible so that is why you need to use the whole of market.

where to find the best annuity quotes

This annuity news blog will always recommend that you seek advice from an independent annuity specialist. Only an independent can get you quotes from the whole market and only an independent acts on your behalf to research all the options and will check if you qualify for enhanced annuity rates.

Your existing pension provider may not be the best rates for you new annuity, by all means get them to try and match any annuity quotes you may have found from the whole market. Never just accept the first quote you are given by your pension provider. Unfortunately in the retirement market, some two thirds of people still just accept the first quote given them by the pension provider.

How to reclaim the tax on purchased life annuity income

A purchased life annuity is one where you buy an annuity from your own funds. The reason these purchased life annuity are so popular is because they are tax efficient.

As with all taxes they have to be claimed, they are not given automatically. If you do not claim them you do not get them and that would eliminate the tax effecient status of them.

With purchased life annuities the capital element is treated as a return of your original investment and is tax free. The income element is taxed as savings income at a 20% rate of tax for basic rate taxpayers. Higher rate taxpayers will have to pay a further 20% tax.

The amount of capital element depends on your age and sex as well as the other benefits attached to the annuity. For example a 65 year old male would get £832 of every £1000 as return of capital, where an 85 year old male would get £971. Both assuming the level income is paid monthly in arrears, with no guaranteed period, without proportion and a 50% dependents income as a joint life annuity.

Tax on purchased life annuities

If you’ve got a purchased life annuity, 20 per cent tax will be automatically deducted from the income element you receive from it by the annuity provider. However if your overall level of income means you’re not a taxpayer you can ask to receive purchased life annuity income tax-free. Use form R89 to do this.

Annuities – Don’t Put All Your Eggs In One basket

When you purchase annuities don’t put all your eggs in one basket. You can phase your retirement income by using part of your pension fund initially and the rest of it later. With phased retirement it is possible to phase your retirement in an as many steps as you need.

You may have savings that you can use in the early years of your retirement and will not need such a large income from your annuities. It is very easy to just exchange a part of your pension fund for an annuity giving the amount of income you need at that point. Most pension funds are split into clusters and you can just en cash the amount of clusters needed to provide the income.

Once you are retired you could cash the remaining clusters as and when required. There are also death benefit advantages to doing this as the remaining clusters in the pension fund would be paid tax-free to your estate on death.

Get Annuity Advice

There are many advantages to phased retirement, but it is always wise to seek annuity advice from an independent financial adviser to ensure you do things in the most efficient way.

Pension Annuity from the Whole of Market

When you need a pension annuity you need to use the whole of market. Not all annuity desks or brokers will give you the best pension annuity from the whole of market and this could cost you thousands of pounds of lost income for the rest of your life.

How to get the best Pension Annuity?

The best pension annuity rates can be found by exercising your right to the open market option but also ensuring that you use the whole of market. Whole of market means just that, you get the rates by considering all the annuity providers. Most of the annuity providers will give you a pension annuity using their own rates which could be less than the open market option will provide you. Also, many of the broker desks only use a panel for pension annuities, which again may not give you the best pension annuity rates.

Use a Pension Annuity Calculator

Pension annuities are influenced by the options you decide to take, and it is generally a good idea prior to retirement to find a pension annuity calculator to see how much income you might get from your pension fund. These simple pension annuities calculator allow you to quickly change the options and see how it affects the income you will receive.

To summarise then: To ensure you get the best pension annuity for your retirement you should research from the whole of the market. Use a broker that understands annuities and recommends from all the annuity providers.

Annuity Quotes using Annuity Calculator

Getting annuity quotes at retirement is probably easier using an annuity calculator. The annuity calculator allows you to change the options quickly and then produce the list of annuity quotes from each of the annuity providers.

Finding the best annuity calculator means searching the web for one or you could visit an annuity specialist and they would then produce the annuity quotes for you.

Annuity Quotes from the Open Market Option

Whenever you are looking to get annuity quotes, make sure that you get them from the open market option, that way you can be sure that they are the best. The open market option gives you the right to take your pension fund to another annuity provider. Once you have found the best annuity quote you will need to move your pension fund to that provider.

Getting the best annuity rates

Once you are happy that the annuity quotes you have found for the best annuity rates meet your objectives you then need to get advice from an annuity specialist like annuitysupermarket. The specialist will ensure that you fund is moved from your pension provider to the new annuity company with the least hassle and in quick time.

Long Term Care Annuities

In the later years of retirement many people need help with activities of daily living such as washing, dressing, feeding, toileting, mobility and travel. Eventually you may need residential care or move into a nursing home. This care is generally referred to as long-term care and obviously will need to be paid for but the unknown factors are:

  • Whether you will need long term care
  • When you will need it
  • How much will it cost per annum
  • How long you will need to pay for it

A few specialist annuity providers have now developed long-term care annuity products because they recognise the suitability of an annuity as a way to meet the ongoing cost of long-term care.  The annuity payments can be made direct to the registered care provider, so the annuitant has no tax liability.

As usually the age of a person entering into long term is high, their life expectancy is relevantly short, which means the annuity provider will be able to pay higher annuity rates. A the same time because of the age the retirees are also likely to qualify for aenhanced annuity rates, which will again lead to an improved annuity income.

Long-term care annuities are just one of the funding choices available to retirees entering long-term care. They are cost-effective, an excellent way of ensuring a guaranteed lifetime income to offset the cost of long-term care, and provide peace of mind.

If you are interested in providing for your long-term care, or if you wish to enquire on behalf of a friend, please complete our enquiry form or call our freephone number.

Are you eligible for enhanced annuities?

When you reach retirement you may qualify for enhanced annuities which can give you up to 30% more retirement income. You do not have to be in poor health to qualify for enhanced annuities, you can qualify for lifestyle as well as health.

What lifestyle factors qualify for enhanced annuities

These are some of the lifestyle factors that qualify for enhanced annuities. Depending on the severity of them will determine the enhancement of annuity rates you will get. These are only a few of the many that can qualify.

  • Height and Weight
  • Postcode where you live in the country
  • The amount of alcohol that you drink and what type of alcohol you drink
  • Smoking and how many each day, what you smoke (cigarettes, tobacco or pipe)  and how long you have smoked for to qualify for smoker annuity rates.

Annuity providers have many years of data to understand what lifestyle issues can affect life expectancy. It is life expectancy that determines the annuity rate you get. If an annuity provider has to pay out the annuity for what they believe will be a shorter time than average then they will give a higher annuity rate.

There is much evidence in the public domain that indicate that smoking and alcohol in particular reduce life expectancy.

Find the Best Annuity Rates Using Annuity Calculator

Everybody wants the best annuity rates for their retirement to be as comfortable as possible. Many, however do not know how to find them and that is where the annuity calculator can help.

An annuity calculator can make life really simple by just allowing you to keep varying the options and seeing how much they increase or decrease the amount of income you get from the pension fund you have.

Annuities Calculator Options

There are two types of annuities calculator, the simplest just takes your pension fund amount, your gender and your age it then produces a table of results that show you how much retirement income you would get. You can very the pension fund amount by taking off the tax free cash you wish to take. So you can vary the pension fund amount by a maximum of 25% allowing for tax free cash.

The more sophisticated annuities calculator allow you to use postcode, continuing pension for your spouse or civil partner, escalation amount (which can be fixed percentage or retail price index), guarantee payment period (normally maximum 10 years) and finally any capital protection required. The results from this as you can imagine are far more advanced and allow you really work hard on which options are the best for you.