Pension Annuities
Helping you get a guaranteed income for as long as you need
Let us explain what annuities are...
What is a pension annuity?
A pension annuity is a method of receiving your pension fund through regular, guaranteed payments for either a fixed term (known as fixed-term annuities) or the rest of your life.
You may choose an annuity if:
- You want the reassurance that you'll receive a guaranteed income every year.
- You’d like a guaranteed income for either a fixed term or the rest of your life.
- You want to avoid investment risks, such as lost capital.
Annuities are purchased using your pension savings. However, you do not have to put all your savings into an annuity. You do not have to purchase an annuity from your pension provider, and you may find that shopping around gets you a better deal.
If you are new to annuities, read on to find out more about them.
Pension annuity options explained
Considering the right annuity option
There are different types of annuities and protection options and it’s important to get the right one to make the most of your money.
Here’s a quick summary of some of the different options:
Level annuities
These will pay the same amount of income every year.
Enhanced annuities
If you’re ill, smoke or are physically unfit, your annuity rate could increase (meaning you could be eligible for an increased income). You might also be entitled to increased income depending on the area you live in.
Inflation-linked annuities
Your income can increase each year to protect against inflation. You can choose a fixed percentage (say 3%) or an index i.e. Retail Price Index (RPI).You can't normally change the basis of your annuity, cash it in or transfer it.
Joint-life annuities
You've got the option to arrange for part of or all your annuity income to continue to be paid after you die to your spouse or partner (or another beneficiary).
important information about annuities
Here's what you need to know about pension annuities
Advantages
- It gives you a guaranteed income for life or a fixed term.
- You can protect your income by taking out death benefit, which continues to pay an income to your partner or spouse after you pass away. Alternately, you can request a lump sum payout.
- You can also protect your income against inflation.
Disadvantages
- If you pass away shortly after the plan starts you may not receive its full value.
- There is no flexibility to vary income and you can’t take money out (other than the income payable). You may need other savings if you want to use your retirement for big plans.
- There are potentially better returns available from other products.
- If the Government changes the way annuities are taxed, the income paid to you may fall.
You should also consider…
Eligibility
To be eligible for an annuity, you must be aged 55 or older and must have a minimum of £5,000 to purchase (after deduction of tax-free cash).
If you want to support dependants
This will impact the specific annuity product and/or benefits you choose.
Your health
Depending on your lifestyle, medical background, and current health, you may be eligible for an enhanced annuity product – so be honest when answering questions regarding this.
Tools and Calculators
Handy tools to support your retirement planning
Fixed term annuity calculator
Our fixed term annuity calculator gives up to date results based on current rates. We shop around the whole of the market to get you the best quote for your specified income and/or guaranteed maturity value.
Annuity calculator
Using today's rates our calculator can give you a snapshot of the income your pension savings could buy you in retirement. You can also choose to add your health details to personalise your quote even more!
Pension drawdown calculator
Our pension drawdown calculator provides a helpful plan of what income you could get if you’re looking to take your pension pot flexibly.
State Pension Age
Looking for your State Pension age and what you can expect to get? Our friends at Gov.uk have you covered.
Pension advice
Unsure if a pension annuity is right for you?
If you are still unsure about what to do with your pension and whether an annuity is right for you, our Retirement Advice Service can help point you in the right direction. You can speak to our advisers for a no-obligation, free initial conversation about your future plans.
Please note that in most cases, your advice report and explanation as part of our Retirement Advice Service is also free. If you choose to proceed with our advice, we will charge you a fee (all fees will be explained clearly right at the start).
Buying an annuity
Certain that an annuity is right for you? We can help
At LV=, our pension advisers can help you find the best annuity rate on the market.
Though LV= is an annuity provider itself, our advisers are impartial and will look across the whole market of providers to find the best annuity for you.
We are strictly regulated by the Financial Conduct Authority, so you can trust that you’re safe hands and getting the best deal for your individual circumstances.
Frequently asked questions about pension annuities
Advice or guidance
What's the difference between advice and guidance
Advice is given by professional advisers such as IFAs, financial planners, wealth managers and pension specialists. Advice is regulated by the FCA, protecting you from negligent advice and will give you tailored recommendations for your individual circumstances and ensure that the best option or combination of options for your circumstances is found, even if this goes against what you originally thought to be the best decision for you. Taking advice usually costs money.
Speak to one of our expert advisers today and see how we can help you find the best income for your pension. We can:
- Give advice on all types of pensions.
- Maximise your pension income.
- Help you make the best possible use of your hard-earned savings.
Guidance gives a general overview of the options available on the market for free by highly trained specialists. Guidance services won't tell you what to do with your money and you will need to research the market to find the right products and providers to suit your needs and preferences. There's no protection available, but taking guidance is a good place to start to help you understand the various choices available.
For guidance on your defined contribution pension, we recommend visiting Pension Wise, a free government service from MoneyHelper, offers impartial guidance on your pension options.
To book an appointment call 0800 138 3944, 9am to 5pm Monday to Friday, visit their website, or email at [email protected].
Pension Wise won't recommend any products or tell you what to do with your money.
Looking for more information on annuities?
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