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Important things to consider about pension annuities

Is a pension annuity for you?

When looking to turn your pension savings into an income it’s important to consider your overall financial circumstances and retirement plans to make sure the product you have chosen is the best way of achieving your objectives.

Our team of pension specialists will give you all the information you need to help make this important decision but if you are still unsure of what’s best for you, we have a team of Financial Advisors who will recommend the best pension option to you.

Our Pension Income Service will make sure you have considered all other pension income options available to you, such as:

Does your current pension provider offer any pension annuity benefits?

Some pension providers offer pension annuity benefits such as a guaranteed annuity rate, which may be higher than the rate you can achieve by comparing the market, so it’s important to check this with your existing pension provider. If you are unsure about what pension benefits are, our pension income specialists will happily explain them to you.

Should I buy a pension annuity now?

If you are happy a pension annuity is right for you, but are unsure whether now is the right time to buy you can always delay the purchase.

Delaying buying a pension annuity could take you decades to make up for the lost pension income³. You could receive a higher annuity rate by being a year older than today but that increase is normally quite small when compared to the income you could have received during that year.

If you were to defer buying a pension annuity and suffered any damage to your health during that period you may qualify for an enhanced annuity rate. This could mean you receive a higher pension income.

There are no guarantees whether pension annuity rates will rise or fall. You should consider what the impact could be on your retirement if you wait and get a higher or lower pension annuity rate when you come to buy an annuity.

Proceeding with your pension annuity purchase

As part of our service, we will be delighted to arrange the purchase of your pension annuity on your behalf.

This will involve a transfer of funds from your current pension provider(s) to your chosen annuity provider. Don’t worry if this sounds like hard work; because it’s part of our job to do this for you and we have a team of pension income specialists for precisely this purpose.

Typically it will take 3 to 4 weeks to complete the pension annuity purchase, at which point you will receive your chosen amount of tax-free cash⁴ and your pension income payments will begin.

Throughout this process, we will keep you informed, and ensure that your chosen pension annuity provider has all of the information that they will need.

Your cancellation rights vary depending on the pension annuity provider you choose, however we will inform you of what they are before you proceed. Please note that buying an annuity is a lifetime decision and after the cancellation period has ended you can’t change your mind.

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¹ There are no guarantees of the income this will provide at the end of the term as this will depend on economic and investment conditions at that time. For example, annuity rates may be higher or lower than they are now.

² The value of investments and the income derived from them may go down as well as up.

³ The Telegraph, Sept-13.

⁴ Most people can take 25% of their pension savings as a tax-free lump sum, however some people may be able to take less and some more. Your ability to take 25% of your pension savings as tax-free cash, as well as how you are taxed on your pension income will depend on your individual circumstances and may change in the future.

All of the information that we provide is based on our understanding of current tax and pension rules, which can change.

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