Pension annuities; get more, and higher UK annuity rates as a possible result. Some tips on getting a better outcome with your pension annuity. First, you could retire later, and this will give your pension fund the opportunity to increase in value over time and potentially yield more annuity income. Plus, annuity rates are usually higher the older you get which will improve your annuity income too. Of course, you could take your tax-free cash entitlement, and take up to 25% of your pension fund as tax-free cash. Tax-free equals more cash in your pocket.
Then again, you could consider taking tax-free cash but deferring your pension, If you can afford it, leaving the remaining 75% of your pension fund invested. It could grow in value and provide a larger pension annuity income in the future. Of course, if it’s invested in the stockmarket, it could potentially fall in value as well. Don’t forget to recover any lost pension plans; a forgotten plan can really help to increase your income. You could start your search using the Pension Tracing Service. In addition, you could look at transferring old pensions; if there are still a few years remaining before you retire, think about transferring pension plans which aren’t doing well. The value may recover with better fund management.
Of course, when it comes to buying your annuity, there is a golden rule, use the Open Market Option (OMO) to shop around for the best UK annuity rates and don’t necessarily take the annuity rate offered by your current pension provider. It is possible that your pension plan has Guaranteed Annuity Rates (GAR) built into it; some older-style pension plans come with GAR’s which could be far higher than current UK annuity rates. If that’s not enough to consider, there is your health. You could use your health to boost your income, for example, if you smoke or you’re overweight, or of you suffer from ill health. If so, you could qualify for higher annuity rates from an enhanced annuity. Even more so if you suffer from a serious medical condition.
You might want to think about a with-profits annuity. These are invested in an insurance companies with-profits fund and have the potential to provide a rising annuity income if the fund performs well. You’ll also be guaranteed a minimum income. But they can be risky, and your income could drop. To cap it all off, you could simply defer your annuity purchase. Older people generally get higher pension annuity rates so the longer you leave it the better off you might be; but watch out for the annuity income you’ve missed in the meantime.