Annuity jargon buster - Retirement - Guides - Moneyfacts


Annuity jargon buster

Annuity jargon buster

Category: Retirement

Updated: 09/05/2016
First Published: 24/05/2011

What is an annuity?

One of the options you have in retirement is to buy an annuity with the money you've saved in a stakeholder, workplace or personal pension fund. You can choose to take up to 25% of your fund as tax-free cash, although this will mean you'll have less with which to buy an annuity, and as a result will receive a lower income in retirement.

Once bought, your annuity will pay you an income for the rest of your life. Income from an annuity is taxed in the same way as employment income and is usually paid net of basic rate tax. Higher rate taxpayers may be liable for additional tax.

Annuity jargon

There are many different features and options open to you when choosing the best annuity, so we've compiled a jargon buster for some of the common terms you are likely to hear.

We have more guides and jargon-busting explanations in our retirement planning section.

What next?

Compare the best available Annuity Rates

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

Related Articles

What is an Escalating Annuity?

Should you buy an inflation linked or escalating annuity? You can have part, or all, of your annuity increasing, to help combat inflation.

What is an Annuity Guarantee Period?

Make sure your annuity is paid for a minimum time by taking an annuity guarantee period – but make sure you consider a joint annuity as well.

What are enhanced annuities?

An enhanced annuity can pay you far more in retirement. There are many factors that affect how much of an annuity you’ll get – we discuss them here.
Save on Mortgages
Call our experts now to see how much you could save.
0800 193 6644 Lines open 8am to 8pm Monday to Friday
Phone lines are manned by Premier Financial Group Ltd who are authorised and regulated by the Financial Conduct Authority.