Annuities

What is an annuity?

Quite simply, an annuity is a way of converting money you have built up in your pension fund into an income for the rest of your life. In fact, it's a kind of insurance policy which ensures you won’t run out of money before you die.

If you have one or more company or private pension funds you’ll be able to take some of the cash you’ve accumulated as a tax-free lump sum. With the rest you can buy an annuity.

There are many types of annuities. Once you’ve chosen an annuity, it’s permanent and you can’t normally change it at a later date.

We’re proud of our annuities products at LV=, so much so that we have a dedicated website you can visit full of information about enhancing your retirement income.

Choosing an annuity is an important decision. Our LV= annuity experts are here to talk you through the best approach for you.

The open market option

Most people would be far better off if they took the Open Market Option and shopped around for their annuity. The trouble is, it’s all too easy to accept the first offer you get from your existing pension provider.

The difference between the worst and the best basic rates available can be huge. But the basic rate isn’t the only consideration. If you’re in poor health, a heavy drinker, or a smoker, you could qualify for an enhanced annuity. We believe the increase of moving to an enhanced annuity could be as much as 30%. This 30% increase is based on an overweight smoker with recent heart attack, high blood pressure and high cholesterol. The increase you could receive may be higher or lower depending on your personal circumstances.

You should also look at whether they are offering a single or joint-life annuity and whether it’s a level or escalating annuity.

When deciding which option to take at retirement there is a lot to think about and our expert advisers will ensure you make the right decision to suit your retirement needs.

Before you sign up with your existing provider it's worth remembering a few key points:

All pensions are portable and everyone has the right to look for the best offer available . And it’s not difficult to shop around with the help of an expert. What’s more it could make a difference of thousands of pounds to your retirement income every year.
It’s not just a matter of getting the best rate, it’s also important to choose an annuity that suits your needs. Not all annuities are the same, and if you don’t choose carefully, you could be missing out on the right product for you.
You can’t change your mind once you have taken out an annuity. So, you need to be sure that you’ve got the best deal and the provider you’ve chosen is financially secure.

At LV= we're founder members of PICA (the Pension Income Choice Association) which is an industry-led body to promote the awareness of the OMO and to modernise the retirement income industry.

What are the alternatives?

Everyone’s finances are different so buying an annuity at retirement may not always be the best option for you. If you don’t want an annuity, or if you decide to delay buying one, there are a few other options you might consider such as investing in an LV= Protected Retirement Plan. This will provide you with a fixed income for a specified period. At the end of that time, if you're still alive, you'll be paid a guaranteed lump sum.

We offer a range of the protection, pension, annuity and investment products from the Liverpool Victoria group of companies. We also offer annuities and investments from a limited number of other companies.

Speak to an adviser

You can phone us
Call our UK-based advisers for more information or a quote:

0800 756 8840
Textphone: 18001 0800 756 8840

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