Choosing The Right Annuity.

The choices you make now will affect you – and your partner – throughout you retirement.

There are many different type of annuities and the kind of annuity you choose will very much depend on your own personal circumstances and needs. Because you cannot normally change the annuity once you have purchased it, it is of absolute importance that you check ALL the available options to ensure that you have the best one to suit your needs.

REMEMBER THAT THE TYPE OF ANNUITY YOU CHOOSE WILL AFFECT THE AMOUNT OF INCOME YOU GET BOTH INITALLY AND IN THE FUTURE YEARS.

For advice on which annuity is best suited for you please click here.

 

The Main Types of Annuities.

• Level

• Increasing

• Annuities If You Have A Partner

• Investment Linked

 

LEVEL

A Level Annuity (sometimes called a Standard Annuity) pays the same income year after year for the rest of your life. The main drawback of a Level Annuity is that what you can buy with the income falls as prices rise. In short, inflation will eat away at the buying power of your pension the longer you live, but having said that, Level Annuities pay a much higher starting income than an Increasing Annuity.

For more information about this type of annuity please click here.

 

INCREASING

To protect you income from rising prices, you can choose an annuity that is designed to increase each year. There are two main choices:

• Fixed Rate Increasing Annuities – Your income is guaranteed to increase at a fixed rate each year, commonly by 3%.

 

• RPI- Linked Annuities – Your income is adjusted each year to reflect changes in the Retail Price Index (RPI) – The main measure of inflation used by the government.

 

With an Increasing Annuity the starting income is a lot lower than you would get from a Level Annuity.

For more information about this type of annuity please click here.

 

ANNUITIES IF YOU HAVE A PARTNER

All types of Annuities can be single life or joint life.

A single Life Annuity pays out during your own lifetime. Your partner will get nothing when you die, however, a joint Life Annuity continues to pay an income to your partner after your death.

On your death, some annuities carry on paying out the same amount. With other, the amount is reduced – for example, by a one third or a half. You can choose at the outset how much you wish your partner to receive.

If you are not married, it is wise to check with the provider to ensure that your partner will be eligible to receive it.

For more information about this type of annuity please click here.

 

INVESTMENT LINKED

These Annuities offer the chance of a higher income from either Level or Increasing Annuities. However, this chance only comes by taking an extra risk; you need to be comfortable with linking your income in retirement to the ups and downs of the Stock Market.

These Annuities carry more risk because:

• Your income is likely to change each year, and could go down as well as up.

 

• The size of any increase (or decrease) is unpredictable.

 

For more information about this type of annuity please click here.

Also, more information on ALL the Annuities here can be found on the FSA website, to view this website click here.