What you need to know about Annuities
Most Annuities provide you with a lifelong, regular income that is guaranteed to last as long as you live. A quarter (25%) of your pension pot can usually be taken tax-free, up to your remaining lump sum allowance, before you buy the annuity and any other payments will be taxed as earnings
At a glance –
Advantages
- You get peace of mind because you’re guaranteed the income you have arranged
- You can make plans for the future knowing how much income you’ll have
- It’s possible to provide an income to your spouse or partner or leave any surplus to your loved ones
- Even if you live past 100, you could still have an income
- You can combine the guaranteed income from an annuity with other types of retirement income
Keep in mind
- Annuity rates can change over time and so how much you might get will depend on the rates available at the time you buy an annuity
- It can take many years for the payments from an Annuity to add up to more than the money you had saved up in your pension pot
- Providing an income to your spouse or partner or leaving any surplus to your loved ones may mean your income will be lower
- Most Annuities aren’t flexible. Once you’ve bought one, you have to stick with it – even if your situation changes
- Unless you choose an increasing annuity, the income you receive will remain the same each year. With the effects of inflation, it will buy less as the years go by
- Unless you choose an investment-linked Annuity, you won’t benefit from economic or stock-market growth
Finding the right annuity
There are many different types of Annuities that offer different benefits. So, it’s important to think about which type of Annuity would be best for you.
- Do you want an income that will remain the same or increase each year?
- Do you want an income just for you or one that will pay to your spouse or dependants if you pass away first?
- Do you want to benefit from stock-market performance?
- Do you want to buy an annuity for a shorter fixed term and then review your options?
- Could you benefit from a higher (enhanced) annuity that takes into account any existing health issues you may have?
We’d recommend that you get advice from a financial adviser to help you understand more Annuities and if they’d work for you.
Fidelity
How we can help
There are lots of reasons why Annuities are currently very popular, so if you’d like to find out more about the way they work and whether an Annuity would be suitable for you, why not get in touch to arrange to meet with us? Call us on 0808 123 4321. Your meeting will be without obligation and at our expense.
Logic Wealth Planning provides independent financial advice in Manchester, Bury, Rochdale, Cheshire, and the surrounding area, but not limited to the region.