An annuity is a type of insurance contract that provides a guaranteed income, which behaves in a pre-agreed way, and is payable for the rest of your life.

The rules governing annuities were changed when the flexible access rules to pensions were reviewed. Many are not aware of these changes, and while annuities are generally inflexible, the options do provide the opportunity to build in more certainty of value.

Retirement annuities:

  • Provide protection on death for any beneficiary and not just defined financial dependents such as a spouse or children.
  • Extend the annuity guarantee period (the period over which the annuity will be paid) to your preference, where previously this was restricted to 10 years.
  • Value protection is available to guarantee that, at least, the annuity’s purchase price is returned in the event of death.

Remember that once it is set up, an annuity is fixed and cannot be amended, so you only have one option to get it right. Income paid is liable to tax at your marginal rate, but is only payable for as long as you live. If you would like any more information on annuities, or you are unsure about which pension option is right for you, please contact us to speak to an independent financial adviser.

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