Before you buy an annuity with your pension funds, a great deal of thought has to be given regarding choosing your annuity options.
Your annuity needs to meet your particular needs and circumstances.
Examples of some of the options that you might wish to consider are as follows:
Do you want it to provide only you with an income (a Single Life Annuity), or do you want it to include benefits for a spouse, partner or other financial dependant (a Joint Life Annuity)?
If your annuity is to include dependants’ benefits, you can normally choose for them to receive an income that is equivalent to between 50% to 100% of the income that was being paid to you at the time of your death.
Do you want the income paid monthly, quarterly or yearly?
Is it to be paid in advance or in arrears?
Do you want your annuity income to be paid on a level, index-linked or on a fixed, increasing basis (e.g. 3% per annum)?
Do you want a guaranteed payment period? This can ensure that your family receive a minimum return from your annuity if you die within, say, the first five or ten years following the start of your annuity.
These are the main options available but a few annuity providers offer other annuity options so you might have to do a bit of research.
Once you've finished choosing your annuity options, you will be in the better position to start shopping around for your annuity.
Does this sound a bit too complicated?
Why not talk to an independent pension adviser? They can provide you with advice regarding the best annuity options for your personal circumstances.
If you are not sure, don’t take any chances. You have to get it right the first time!
See the following for more information: Annuity Advice & Assistance