Are you approaching retirement?
13 December 2011
If so, you need to start looking at annuity rates so that you
can make an informed choice. An annuity will provide taxable
regular income for the rest of your life. Taking out an annuity is,
therefore, one of the most important retirement choices you will
have to make and it is vital that you shop around and see which
will be the best type of annuity for you.
Annuity rates are constantly changing and therefore, here at
Prosperis Ltd, we will be happy to discuss your options with you at
any time. Click here to read on.
What is an annuity?
An annuity is the pension income that you will receive once you
have retired. You no longer need to take all your benefits by
the time you are 75, however, after this age you can only take
benefits as income. Your annuity will also provide you with a
guaranteed pension income for the rest of your life.
What are enhanced annuity rates?
If you can answer 'Yes' to any of the following questions, you
may qualify for enhanced annuity rates:
- Do you smoke 10 cigarettes or more each day and have done
continuously for 10 years or more?
- Are you currently taking any medication to treat a chronic
(long-lasting) illness?
- Have you ever been taken into hospital for any medical
condition?
If you are suffering from a health condition which might lead to
a shorter life, enhanced annuities, offered by specialist annuity
providers, provide an income boost. They can pay an income that can
be up to 40% higher than a standard annuity. Even higher enhanced
annuity rates can be gained for those with more serious health
problems. These can sometimes pay an income of over 60% higher than
that paid by a standard annuity.
Does getting an annuity quote mean having a
medical?
Yes, in order to qualify for enhanced annuity rates your annuity
provider will ask that you have a medical and may also ask to
consult your GP or hospital consultant for more information.
What is the Open Market Option (OMO)how is it relevant
to an annuity?
Many people assume that they have to buy their annuities from
the company that has held their pension. This is not the case; you
have the right to shop around for the best annuity rates when you
retire. This is called the Open Market Option (OMO) and it applies
to everyone. Figures from the Association of British Insurers (ABI)
show that 61 % of people who bought annuities in 2007 did not shop
around in this way so are likely to have lost out.
What are purchased life annuities?
Purchased life annuities are bought from your own funds or
investments and they act as 'top ups' to annuities you have bought
into using money from your pension fund. There are significant tax
advantages in buying purchased life annuities, which in turn makes
them very attractive to those with a substantial lump sum to invest
and who want to convert it into a regular, guaranteed annuity
income.
What's the difference between a pension
annuity and a retirement annuity?
Most people think that their pension annuity starts paying out
automatically when they retire, but that is not how it works. It
might sound confusing, but the retirement annuity is the same thing
as a pension annuity.
Your retirement income or retirement annuity is paid from the
pension fund that you have built up over the years. The government
says you must use three quarters of this fund to buy a pension
annuity that will provide you with an income in retirement. This
retirement annuity can be structured to suit your own particular
circumstances.
If you would like advice on annuities or would like to discuss
your options for retirement, please give us a call on 0113 234 5528
or e-mail advice@prosperis.co.uk