Annuities

If you’re reaching retirement, you’re probably looking forward to turning your dreams into a reality with the income from your pension. There are a number of options available – for example, conventional annuities, which pay a fixed income for life; investment linked annuities, where the income can go down and up depending on how well the underlying investments perform; and unsecured pensions, usually via income withdrawal, where the fund remains invested after a tax free lump sum has been taken (although in most cases the fund must be converted to an annuity by the time you reach 75 years old.) So when the time comes you should look at all the options before deciding which one is right for you.

Most people buy an annuity. But what is an annuity? It is a form of insurance which guarantees to pay you an income for life – no matter how long you may live. So you need never worry about your income drying up. This makes it safe and secure and gives you peace of mind.

Before choosing an annuity product though, it’s worth comparing the annuity offered by your pension provider with others available, since the levels of income available from different providers can vary drastically. That said, you’ll also need to check with your pension provider whether your pension has a Guaranteed Annuity Rate: this is important, because, if it does, this could give you a higher level of annuity than you could find elsewhere. Be careful, too, if you intend to take benefits earlier than your planned retirement age, since in some circumstances penalties could be incurred which would reduce the value of your fund.

Once you’ve done your research, and if you decide to choose an annuity, there are plenty to choose from and it is important that you choose one that is right for you and your personal circumstances. You can make your decision based on whether you would like your income to stay the same throughout your life, go up each year by a fixed amount or match yearly changes in inflation, and whether you want to provide a pension for your spouse or partner after you die.

You can also consider putting the total fund from different pension plans into one annuity.

To find out more about the options available to you, book an appointment with your Financial Planning Manager.

• Important Information

  What you get back at retirement from a personal pension will depend on the investment performance of the underlying assets, and the annuity rates applicable at the time that you take your pension benefits. The value of investments can fall as well as rise. Returns are not guaranteed and you may not get back what you originally invested. The favourable tax treatment of pensions may change at any time in the future. The value of tax relief will depend upon your personal financial circumstances. Annuity rates may fall or rise. If they fall, the pension you buy at later date may be smaller. You must take a tax-free lump sum before your 75th birthday or will looe this option. Any income you withdraw will be taxed as earned income. You can't access your money in your pension until reach the age of 50 going up to 55 in 2010. There are different types to suit your circumstances. Once you have selected your annuity provider it is not possible to change to another provider so take time to shop around to choose the one that provides the best rate for you. The Key Features document informs you about the product's aims, its objectives and the risks involved.

With Barclays Financial Planning you get:

• Competitive rates.
• Access to leading service and products.

For more information call 0800 587 2024 to book an appointment or request a call back.