You could cash in pension fund; don’t worry about best pension annuity rates because you won’t be taking a pension annuity. You can do this using the triviality rules. These allow you to cash in your hard earned pension fund and receive a lump sum instead of an annuity in return. However, buying an annuity at retirement is actually compulsory for most pension fund investors, so these rules are strict. First, they only applies to very small pension funds where the total value of all your pension funds is below 1% of the lifetime allowance figure (currently £1.75 million). That means, this financial year, you can only swap your pension for a cash lump sum if it’s worth £17,500 or less.
Basically these triviality rules allow you to ignore finding the best pension annuity rates when you reach your retirement and ignore pension annuities completely if you don’t have a large pension fund. This means you won’t have to sacrifice your fund to an insurance company (annuity provider) where it’s usually lost on your death. You can take advantage of these triviality rules at any age between 60-75. If you have more than one pension scheme, they must all be cashed-in within 12 months of turning the first scheme into a lump sum. 25% of the cash will be paid as a tax-free lump sum, and the balance will be treated as taxable income in the financial year you receive it. It could be worth looking into if you have a small fund.