When its time to choose your annuity its important you’re comparing similar annuity plans when comparing annuity quotes. How much cash you are going to receive and how frequently depends on the choices you select to ‘shape’ your annuity.
Designing your annuity
Your pension provider will write to you personally outlining the choices you can make in retirement as you approach your planned retirement date. An option that could potentially be outlined to you is to buy an annuity.
The documentation they send you will outline the annuity they think is right for you as well as how its designed. Now you should ask yourself what’s significant to you personally, to ensure you pick the income characteristics which fit what you need from an annuity.
|What you want?||Key Feature||Why its perfect for you?|
|To choose how often you receive your cash income?||Payment Frequency||You select the frequency of your payments; monthly, quarterly, half yearly or annual. You may also select when the cash goes into your bank account – at the start or the ending of each interval. Being paid at the end will provide you with the maximum cash, whereas if you get paid at the start you’ll receive the minimum.|
|Your income to reflect the current inflation rate?||Inflation Protection||It is possible to determine whether your annuity will pay a fixed income (that may reduce your purchasing power over time as a result of inflation), or one that grows per annum to shield you against the impact of inflation.|
|To ensure your dependents are looked after if anything happens to you before they’re prepared?||Value Protection||This feature allows you to give a lump sum to your dependants if you do die before you’ve reached the full value of your pension fund.|
|To have the fund pay a partner if you die?||Joint-life Annuity||With a joint Life annuity if anything were to happen to yourself or your partner, the other would still receive an income for the remainder of their life.|
|To get a lump sum of tax free cash?||Tax-free Cash||With this option you can take a cash lump sum of up to 25% of tax free money, the remainder of your money is taxed at your appropriate rate. You may also add the remainder of yor fund to your annuity to boost your income|
|To have increased annuity rates due to poor health?||Enhanced Annuity||An enhanced annuity will give you access to greater rates on the assumption that you aren’t going to live as long due to medical conditions and lifestyle|
|Guaranteed payments for a set number of years regardless of what happens to you?||Guarantee Period||This allows you to fix the number of years you receive an income, even if you pass away the income is still guaranteed for that set period.|