If you are approaching retirement it is vital that you shop around for the best annuity rates. Not all annuity providers offer the same rates and once an annuity has been purchased it cannot be changed. By comparing providers you could increase your retirement income by as much as 40% or more. This can only be achieved by shopping around between each provider to see which company has the highest rate. Complete the annuity quote form now or call us free for no obligation help with find the best annuity and see how much more income you could receive.

Surprisingly most annuitants do not bother to shop around to see which annuity providers have the best deals for them. This results in thousands of retirees missing out on a potentially higher retirement income as a consequence. We advise that when your pre-retirement ‘wake up pack’ comes through the post, you read it carefully before deciding what to do next.

What exactly is an annuity?

In short an annuity is a way of ensuring you have a secure and dependable income in retirement.

An annuity is what you buy from an annuity provider in exchange for the pension fund you have been paying into whilst employed. The provider you choose will then pay you a regular guaranteed income that will be paid for the entirety of your retirement, regardless of how long you live. The money you receive each year from them is taxable and the amount you get depends on how big your pension fund is. Apart from the size of your fund other factors that providers take into account are age, your health, what type of annuity you buy and where you live in the UK. As mentioned not all providers offer the same rate, so you must shop around between providers to see who has the best deal at that time. Remember once an annuity has been purchased it cannot be switched or altered so getting the best annuity rates is vital.

The good news is that you can take 25% of your pension fund as a tax-free lump sum when you buy an annuity. The rest is then paid in monthly instalments.

Which annuity is best for me?

There are many types of annuities to choose from. The vast majority of people opt for what are known as standard or level annuities. These pay the same amount every year and provide a secure and dependable income for the rest of your life. However, they do not take into account the rising cost of living or inflation, so over the lifetime of your retirement your actual spending power will decrease each year. Below are the main options available…

• Escalating annuities. You can set your annuity to rise by a specific percentage each year. So for example you could ensure each year your income is 2% higher than the year before. You won’t get any extra money this way as your starting income will be lower.
• Guaranteed annuities. These ensure that your annuity income will be paid to your partner/spouse should you die soon after your retirement date.
• Investment-linked annuities. These are for those people with a larger pension fund who wish to invest their pension fund into the stock market. This offers you the chance of a higher annual income should the stock market perform in your favour. Be careful though as your income could go down if the opposite were to happen. Not all of your income is invested as providers offer what are known as minimum income guarantees.
• Joint-life annuities. This allows your partner to receive your annuity income after you pass away. This can be 100% of your income or a partial amount, depending on what you choose when you buy your annuity. If you don’t choose a joint-life annuity when you pass away the annuity provider will keep your remaining fund an no further annuity payments will be made.

Here are some tips for buying an annuity…

• Shop around and do not take the first offer from your existing provider.
• Seek professional advice.
• Think about inflation and the future.

Don’t Delay

When you have decided that you do want to buy an annuity, ensure you get a quote without delay. By delaying the purchase you are missing out on the monthly income an annuity provides. Secondly rates could fall – they have droped 45% since the mid 1990′s and since the credit crunch they have fallen even further. With interest rates remaining so low in recent times it seems unlikely annuity rates will climb anytime soon.