Guaranteed Annuity Rates

Guaranteed annuity rates (GAR) are a fixed rate at which an individual can convert a pension fund into an annuity at retirement, irrespective of rates available at that time.

Annuity income

You will be provided with a guaranteed annuity income. However, there are normally some conditions written into the application of the GAR. It is usually only available at the scheme’s selected retirement age, i.e. it will not apply if you retire early or if you retire late, and that could have a significant effect on your annuity income.

Annuity options

A GAR will normally only provide an annuity on your own life and often will not provide for post retirement increases. So you must take care if there are any annuity options you might want, i.e. if you are married and wish to provide spouse’s benefits on your early death with a joint life annuity, or if you are seeking a rising income in retirement, perhaps with an inflation proof annuity. Make sure you understand the annuity options available.

Retirement income

The attraction and value of the GAR is that it can produce a retirement income for life that is higher than anything you can get by applying your fund to buy an annuity from any other insurance company at the time you retire.

The downside to guaranteed annuity rates and the effect on your retirement income is the restrictions which may apply that are highlighted above, i.e. based on your own life only and when you can retire, and advice should be taken if a GAR is an option open to you at retirement.