Do I have to buy an annuity through my existing pension provider?

You have the right to choose who you buy an annuity from. This doesn’t need to be your existing provider. You can also choose what type of annuity to buy, or you can buy one at a later date when you're ready, or you don’t even have to buy one at all.

Since 2015 there has been a greater freedom of choice in how you take your pension benefits so it’s important to understand all of the options available to you.

Some providers can offer you the ability to take income drawdown.  Your pension pot remains invested while you take an amount of income from it, at a level that works for you. 

Some providers offer an annuity which is for a fixed period of time, which guarantees a level of income or a guaranteed value at the end of that period. 

Some providers will allow you to take out your pension in lump sum chunks often referred to as Uncrystallised Fund Pension Lump Sum (UFPLS).

All of these options have different risks associated with them so it’s important you think about how you want to take your pension benefits and if you’re unsure you should speak to a financial adviser who can help you.

Things to consider

You can shop around

The difference between the worst and the best basic rates available can be huge. However, this shouldn’t be your only consideration, if you’re in poor health, a heavy drinker, or a smoker, you could qualify for an enhanced annuity. You should also look at whether they offer a single or joint-life annuity, if you want to provide for your spouse when you’re gone.  Finally, consider if you want an annuity which remains at the same level for the rest of your life or if you want it to escalate, which is where it increases each year.

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 that the provider you've chosen is financially secure.

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

Visit the Annuity Shop if you're certain an annuity is the right option for you, but you'd like us to shop around to find you the best deal.