How to go about getting the best UK annuity rates at retirement. First, some background; an annuity is payable for the remainder of your lifetime, although it is possible to select a fixed period if you’re purchasing an annuity with cash rather than with pension fund money. Examples of these types of “Compulsory Purchase Annuity”, as they are known, are conventional annuities, with-profit annuities and unit-linked annuities. Annuities that are purchased from your savings, not from a pension fund, are known as ”Purchase Life Annuities” and “Immediate Vesting Annuities”.
When your pension fund reaches maturity at your retirement, your pension provider will advise you of the fund value and give you some general information about annuities and the amount of annuity income you would receive from them. You are then entitled to use your Open Market Option (OMO). This allows you to transfer the fund to another annuity provider of your choice for better UK annuity rates. This therefore enables you to take advantage of a higher annuity income which might be available from a different provider. You are normally entitled to take up to 25% of your hard earned pension fund as a tax-free cash lump sum. The remainder of the pension fund must be used to purchase an annuity or an alternatively secured pension (ASP), before you reach the age of 75. The conversion of pension fund money into an annuity is compulsory by the age of 75 here in the UK.
