Until a few years ago, the majority of people retiring had to use their pension pot to buy an annuity. Annuities provide a fixed income for the whole of the retiree’s life. This traditional approach had the benefit of providing a guaranteed income but the size of the regular payment was governed by the economy at the point that the owner retired. Recently these products received a lot of bad press about lack of choice and poor value for money.
Recent pension reforms have seen the majority of retirees move away from annuities in favour of more flexible drawdown products. These have many advantages but do not provide the confidence of having a lifelong guaranteed income.
Recent legislation changes and product innovation gives you access to different types of annuities; enhanced annuities, impaired life annuities, investment backed annuities etc.
More cautious savers who are concerned about the risk of their pension fund running out may still favour an annuity or a blended solution in which part of their pension is used to buy an annuity to guarantee cover of basic expenditure and the remainder is held in the more flexible drawdown option.
Contact us at People and Business to discuss the options available to you for this most important decision and let us guide you through the available annuity options and alternatives. Click here.