Guaranteed Annuities
An annuity is a regular pension payable for life. You buy it using the fund you have built up before your retirement, usually after taking a tax-free cash lump sum.
You would normally buy an annuity from an insurance company. The annuity rates (the rate at which your fund is converted into a pension) vary from insurer to insurer and depend on when you make your purchase. The more competitive the annuity rate, the more pension you will be able to buy with your fund.
The amount of income you can get from your annuity will depend on:
- the value of your fund;
- the amount of tax-free cash you wish to take;
- your age, lifestyle and your post code, lifestyle and health at the time you buy your annuity;
- the annuity features that you choose; and
- the annuity rates offered by insurance companies.
Once you buy a lifetime annuity, you cannot change the type of annuity, change the provider or cash it in. By buying a lifetime annuity you get certainty around the amount of pension that you and your dependants will receive for the life of the annuity. Because of this, it is essential you get the best possible rate.
