As you approach retirement you need to start to think about the choices you need to make when taking your pension.
The first thing to remember is you do not have to take the pension offered by your current pension provider. You have the right to take your retirement fund to a different provider, this is called the open market option.
Choosing the right provider can be very difficult and time consuming, that’s why you should seek advice from an independent financial adviser (IFA) that understands annuities. If you do not already have your own financial adviser then you can use the services of Retirement Solutions limited a specialist annuity IFA.
What is an annuity?
Your pension pot that you have saved is converted to an annuity, which is a series of regular payments of income paid for the rest of your life.
What affects the cost of an annuity?
Your age, your gender and your health and lifestyle can all affect the income you receive from your pension pot.
Who can buy an annuity?
You can buy an annuity if you have one of the following types of pension:
Most Additional Voluntary Contribution (AVC) schemes
Free-Standing Additional Voluntary Contribution (FSAVC) scheme
Retirement Annuity Contract (RAC)
Section 32 policy (buy-out bond)
Occupational money purchase scheme
If you have contracted out of the additional state pension, you must use that part of your pension fund to buy a protected rights annuity. You have the same options as with your other pension funds except that you must buy a joint-life annuity paying a 50% spouse’s pension if you are married or have a civil partner.