Pensions and Retirement Frequently Asked Questions

What is a Pension Annuity?

Answer

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 £5,000 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 ‘maturity’ payment
  • You are likely to want to change any of the options on the plan once it has started
  • You want your income to vary depending throughout the duration of your plan

Other options

  • 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

Still haven't found what you were looking for?