Must you get stuck with poor UK pension annuity rates and buy an annuity? An often asked question. Take the example of a man aged 70, he believes when he reaches 75 he must change his hard earned pension fund into an annuity, isn’t keen on the implications, including the poor UK annuity rates, and wonders why he must do this. Further, he wonders whether he will be able to get the same return on the savings that he gets now, or will he be at the mercy of the fluctuating stockmarket? We have an answer, and buying an annuity isn’t a must.
A response from experts at Alexander Forbes Financial Services suggest that he doesn’t have to purchase an annuity at age 75 in the current market. There is another option, he could purchase an alternatively secured pension (ASP) instead. This is an alternative to pension annuity purchase and is open only to those aged 75 and over. However, the maximum level of income available is 90% (minimum 55%) of the relevant single-life pension annuity rates based on gender for someone age 75, and these income levels must be reviewed every year and cannot be set up with any form of guarantee. This reduced retirement income often encourages retirees to stick with traditional annuity purchase, even though it isn’t something they have to do.