How to avoid choosing the wrong annuity
It has recently been suggested that 80% of annuities are 'single life' annuities. If you buy a single life annuity, it means that when you die, the pension will stop and nothing will be paid to your spouse. If you buy a 'joint life' annuity, your starting pension will be slightly lower, but if you die, a pension will be paid to your spouse at the rate you have chosen.
Many people feel overwhelmed at the thought of choosing an income (an annuity). We had over 4,500 enquiries about taking retirement benefits in the last year. It is well worth investing a few minutes of your time to ensure you choose the right annuity to suit your circumstances. Our annuity planner may help you make your choice. You may be able to increase your retirement income and make sure that your family is provided for, just by taking the trouble to understand your choices.
And remember, when you want to buy an annuity you don't have to buy one from your existing provider. You have the option to shop around, to try to get the highest annuity you can. This option is known as the open market option (OMO).
It is important that you do take time to shop around. Each pension provider will offer a different deal in exchange for your pot, and this can make quite a difference to your income. Some pension providers specialise in providing annuities for people that have health issues or a lifestyle that mean their life expectancy is lower than normal - for example sufferers of high blood pressure or heavy smokers. Others take where you live into consideration.
Although you should always shop around, you don't have to switch. Whether you do or not should depend on whether you can find a better deal. You should also take into account any penalties your existing provider may charge you to move your pot to another pension provider.
For more information visit our shopping around for an annuity section.
Read our simple guide to annuity jargon.
If you would like to discuss your retirement choices, please call us on
0845 601 2923.
Or you can send us a message.