Getting the best Annuity for you
Shopping around for the best annuity for you, or to use the term used within the insurance industry, the "Open Market Option" is a must for anyone considering buying an annuity.
If you have a a personal pension, retirement annuity contract, or any other type of money purchase scheme, then it is always worth shopping around for the best annuity rate for your circumstances rather than just accepting what your pension company offer.
Be careful as some companies will only use a "panel" of insurance companies, and not necessarily all of the companies in the market. So always ask.
Be careful too about so called "free" services, from "annuity brokers" who are paid by commission, this is not necessarily cheaper than getting financial advice. As independent financial advisers we do not get commission, we have to charge a fee. More often than not, this comes out of the pension fund, and ultimately in a very similar way to how commission is paid - by you!
Many people do not shop around either through lack of knowledge or apathy. But it can mean a massive difference in the level of income. If you smoke or have health problems, this difference can be even greater since you could qualify for a smoker annuity or an impaired life or enhanced annuity.
You do, however, need to make sure your existing contract does not offer some level of guaranteed benefits before taking your annuity with another provider. Some old contracts provided guaranteed annuity rates, which at the time, would probably have been far below the then current levels. However, now these rates can seem very attractive, and can be in excess of £1,000 per £10,000 of pension fund, when current market rates are much lower.
These guaranteed benefits can have conditions attached, such as only being available at a certain age, perhaps age 65, or the annuity may only be available on a specific basis, perhaps not including any options such as a spouse's pension or a guarantee. So it is important to ensure that there are no guaranteed benefits which would be lost by taking your pension with another provider.
Stock markets can also move very rapidly, and you need to consider this when you're planning on taking your annuity. The annuity process and the transfer of funds from one company to another can take weeks, and if the funds you're currently invested in fall in value, then your annuity could be smaller. This can be avoided with many existing plans by switching to a safe fund, and this can be done within a matter of days.
Our annuity service
- establish what benefits your existing contract provides
- ensure that no guaranteed benefits will be unwittingly lost
- switch the funds to a safe fund, if you require
- discuss your requirements and the possible disadvantages
- get the best annuity rate from across the market
- send out a written report detailing our discussions
- complete paperwork
- liase with all providers until the annuity is in force
If you can't find the information you're looking for on the website, or you want to know more or have a question, or just want to chat through some details about your pension then please feel free to contact us, without obligation. Either contact us online or call 0800 011 2713.