Some options for your pension annuity purchase
You do have options with your pension annuity purchase when you retire. It is likely that your income needs are going to fluctuate over the next few years and, when you retire, your household income will drop.
And, when you retire what about risk-taking? Probably not with the state of the markets at present.
What about your state of health? Might you qualify for increased annuity rates via an enhanced annuity or an impaired life annuity? These things need to be considered, especially when you are planning your retirement finances.
We have an issue with longevity; people are living longer these days, but they don’t always spend that time in good health. If you were to get ill later on in retirement, you could end up qualifying for enhanced annuity rates then. It’s a big consideration for people in their 50s and 60s now who are thinking about buying a pension annuity. Very often they will be in good health and so will be offered ‘healthy life’ rates.
Your health could deteriorate later on in retirement? You can’t go back and re-negotiate your pension annuity terms. If you are concerned about this you could consider fixed term annuities. These plans offer a guaranteed fixed-term income and a guaranteed return at the end of the plan term. Unlike a lifetime annuity, you are not tied in so you can look around at other options at a later date when the plan comes to an end. You can also choose your annuity income level at outset, between £0 and the maximum allowed by current legislation. This is around 20% higher than a typical lifetime annuity rate.
So, it goes to show, there are options around. For a more comprehensive analysis seek advice.
Tags: enhanced annuity
