Buying the right pension annuity for your retirement income is a crucial decision. When retirement approaches, and you need to take benefits from your pension, there is every chance are you’ll need to buy a pension annuity. A pension annuity is a pretty simple concept: your pension fund is converted into an income which finances you during your years in retirement.
Closing in on your retirement date, you will be sent a quote from your pension company which tells you how much income it’s willing to pay you based on the value of your pension fund; how much they are offering as a pension annuity income.
Many people simply accept that proposition, even though the best annuity rates that they could achieve are probably not on offer. What should happen is that the open market option is utilised and you shop around amongst annuity providers for the best annuity rates on offer to match your circumstances.
However, pension annuities come in all shapes and sizes, with different options and benefits. You need to make sure you choose the right combination. You could choose a Guarantee Period, a Level Annuity or an Increasing Annuity, a Single Life Annuity Or a Joint Life Annuity, an Enhanced Annuity or an Impaired Life Annuity. All are described in detail on this website.
It is very important that you choose the right pension annuity. It will affect your financial well-being for the rest of your life. Get it right and you might even be in a position of receiving more income in retirement than you actually need. Get it wrong and you could lose out heavily. The difference in annuity rates you could receive can be quite dramatic.
The golden rule; take advice when purchasing your pension annuity.
