Moneyfacts.co.uk Best Buys show the best products chosen by our independent experts. Where we have been able to we have also provided a link for you to apply via Moneyfacts.co.uk today. Products shown with a yellow background are sponsored products.
The figures and details shown are obtained from sources believed to be reliable.
However, the accuracy and completeness of any information cannot be guaranteed
and no warranty or representation is given and users must check all rates, conditions
and details before finalising any arrangement. No liability can be accepted for
any direct or consequential loss arising from the use or reliance upon this information.
If you have a defined contribution pension (also known as a money purchase pension), you can decide to convert some, or all of your pension pot into an annuity. An annuity is a guaranteed lifetime income that you buy when you retire. You can buy your annuity from the age of 55 and the income you get is based on mathematical life expectancy models that take into account factors such as your age, gender, where you live, lifestyle and medical history. The older you are when you start your annuity, the higher your monthly income will be. If you have a bad lifestyle habit, such as smoking, or you haven’t been in the best health, you might be eligible for an enhanced annuity. An enhanced annuity can provide a greater monthly income for you in retirement.
The downside to an annuity is that if you pass away relatively soon after retirement, you may not have received as much in income as was in the pension pot you used to buy it. You might think that this entitles your family to any remaining money; however, this is not the case. To be sure of your family getting at least some financial legacy if you die prematurely, you could take out a ‘guaranteed’ annuity. This would continue to pay annuity income to your estate if you die within a set period of the annuity starting (normally annuity guarantee periods are offered over five or ten years). Alternatively, you could opt for something called 'Value Protection' when you take out your annuity. This means that unused money from your pension pot can be returned to your estate.
Another option is to get a joint annuity with your spouse or partner that continues to pay the full amount or a reduced amount after the first person dies. Depending on how old your partner is compared to you, these may pay less than a single annuity, especially if the annuity provider expects to be paying the income for longer where your partner is younger or healthier than yourself.
Some pensions, mainly older ones, offer what is called a Guaranteed Annuity Rate (GAR). As life expectancies increase, annuity incomes have fallen dramatically, so chances are that the GAR your pension provider offers is the best income you can get. Nevertheless it is never more important to shop around than with an annuity as once you make that choice; you are bound by that decision for the rest of your life.
Get annuity quotations from leading providersCompare Annuity Rates with moneyfacts.co.uk best buys More annuity guides
Please send me emails with the latest Moneyfacts news, best buy products and specially selected third party offers
View Investment Services & Costs Disclosure...
Buying an annuity can be fraught with difficulty, but what if you still want a guaranteed income? Th... More
Good news for those seeking a secure income in retirement: our latest analysis has revealed that ann... More
The Government is cancelling plans for a secondary annuity market, citing concerns about consumer pr... More
The winners of the 2016 Investment Life & Pensions Moneyfacts Awards were announced last night at a ... More
Tomorrow marks Pensions Awareness Day (PAD), yet our latest research doesn’t bode well for the secto... More
An enhanced annuity can pay you far more in retirement. There are many factors that affect how much ... More
Don’t settle for the annuity quote your pension provider offers! Make sure you shop around and find ... More
As you get a bit older, as well as getting wiser, you hopefully get a bit wealthier too! Ideally the... More
Norwich & Peterborough Building Society has increased the rate on its two-year fixed mortgage by 0.1... More
Penrith Building Society has unveiled a new one-year variable rate bond, which has been awarded an ‘... More
Nationwide Building Society has cut the rate on its two-year variable tracker mortgage by 0.45%, mak... More
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.