What is a pension annuity?

A pension annuity is a Lifetime Annuity you can buy using the money from your pension pot. It will pay you an income for the rest of your life. To be able to receive a pension annuity, you must be at least 55 years old and have at least £2,000 to invest after you’ve taken any tax-free cash.

Who is a Pension Annuity suitable for?

A Pension Annuity isn’t for everyone, have a look at the below points to see if it is a product you should consider for your retirement.

It may be suitable for you if:

• You want your dependent(s) to receive an income if you die before they do.

• You want an income payable for your lifetime with the option for it to increase annually to protect you against inflation.

• You are generally risk adverse and you don’t want your pension pot to be subject to any investment risk.

• If you or your partner have certain health risks, you may receive a higher income.

It may not be suitable for you if:

• You want the flexibility to withdraw cash from your pension as and when you choose.

• You want a fixed term annuity that provides a regular income, followed by a ‘maturity’ payment after an agreed term.

• You are likely to want to change any of the options on the annuity once it has started.

• You want your income to vary, depending on your needs, throughout the duration of your plan.

Other considerations:

• The Pension Annuity cannot be cashed in or surrendered at any time.

• Purchasing a Pension Annuity is a once and for all decision. The options you select when you buy the annuity cannot be changed later on.

• Annuity payments are classed as income and are subject to income tax, and could affect any State Benefits you claim – it is worth seeking advice from a financial professional to see what income tax you may be liable for.

• Depending on how long you live, you may receive less than you paid for your annuity.

• Ensure you outline any medical conditions you or your partner have as it may mean you receive a higher annuity income.