Annuity information provided by The Annuity Bureau Ltd

Information on this page is provided by The Annuity Bureau Ltd who are regulated by the Financial Services Authority. Information and any figures quoted are general in content, and should not be seen as specific or binding.

You have a choice

Apart from anything else, buying an annuity is the biggest single purchase many of us will make. When you reach retirement, your pension fund may be the biggest asset you have. And, you will have to buy an annuity with this fund at some stage. This single purchase will affect the rest of your life, and unlike many other decisions, it is usually irreversible. So, buying the right annuity is all-important. It can make a big difference to the amount of money you have to spend.

What is an annuity?

An annuity is a financial product, which pays a guaranteed income in return for a capital sum. The majority of annuities bought provide income for life. That is, once the annuity is set up, it will continue to pay you income for the rest of your life.

To see some example rates provided by The Annuity Bureau Ltd

Not just for pension funds

You can buy annuities with your own money as well. If you do this, part of the income you receive will be tax-free. This is because the taxman treats part of the income as a return of your capital. These annuities are attractive to people already in retirement who want to boost their income.

Recently, a new type of annuity has become available to provide for Long Term Care costs. This special type of annuity can pay income free of all income tax subject to qualifying conditions.

Shopping Around

There are lots of annuity companies and lots of options available. In fact, the choice is growing all the time, with many companies competing for business. But, once you have bought, you cannot change your mind. So, it is all-important to get it right when you do buy.

The good news is, you can buy your annuity with any company. It is worth shopping around for the best deal as the income on offer from different companies can vary a lot. In some cases, the difference can be as much as 20% or more. And remember, in the majority of cases, this difference lasts a lifetime. If you are a smoker or have ill-health, it is even more important to obtain alternative illustrations.

The company providing the illustration will want to know your exact age, your spouse's exact age if relevant, where is your pension fund at present (i.e. which insurance company, and what type of contract is it?); they will also want to know if you wish to take some cash from your fund, and will additionally need to know if you are a smoker and your health history. So you will see it is most important that you seek expert advice.

Choosing the Right Options

In addition to choosing the company, you can choose options on the annuity to suit your circumstances. For example, you can choose how often to receive income. As for the choice of company, these options are also important. They will influence the amount of income you get, and again, you cannot alter them once you have bought.

Drawdown

Although you still have to buy an annuity eventually, there are now products available which allow you to take income whilst continuing to invest your pension fund. These products, usually referred to as Drawdown plans, have advantages and disadvantages when compared to annuities, and advice is essential to ensure you get the right product.

Expert Advice

The Annuity Bureau, along with it's sister company The Income Drawdown Advisory Bureau, specialises in helping people buy the most suitable retirement product for their personal circumstances.

Established in 1990, The Annuity Bureau has helped thousands of people get a better deal on their pension and other funds. For more information, click here to visit their informative web site, or call one of their Customer Services Staff on 020 7902 2300 (office hours 8.30am to 5.30pm Monday to Fridays).

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