A fixed income is an attractive option for a lot of people thinking about retirement. After 2015’s pension freedoms you now have several choices for using your pension when you retire. Annuities have lost popularity, but many people still value and want the security that a regular, fixed income offers.
Our research findings
According to our recent research, 79% of people think that a fixed income in retirement is more attractive than one where the value and income level varies based on the markets. And yet, when asked what they wanted to do with their pension money, only 10% said buy an annuity.
Annuity – a dirty word?
Perhaps this is because there is a perception nowadays that annuities are poor value. In the past, they were compulsory for many people so they didn’t run out of money and have to rely on the State pension to fund their retirement. However, many people didn’t shop around – meaning they were stuck with low income rates from whichever pension provider they happened to be with.
Nowadays, you can choose exactly how you take your pension money and, if you do choose an annuity, which provider you buy it from. In fact, our annuity specialists spend their days helping people to compare providers and find the highest level of income.
Peace of mind
Despite the bad press annuities have received, we still think they are a good option. Many people believe that they have taken enough investment risk when saving for retirement, and can’t afford to take any more going forward. In these cases, annuities can offer security and peace of mind with a guaranteed income.
However, it's important to remember that once set up, an annuity cannot normally be changed or cancelled – so it is important to consider all of your options, especially in light of the pension reforms. If you are unsure of your options you should speak to a financial planner or visit Pensionwise.gov.uk.
The different types of annuity
There are several different types of annuities, each with different features:
- Conventional annuities – you receive a guaranteed income that remains the same, regardless of any changes to your health or the financial markets
- Enhanced annuities – your level of income depends on your health, for example, you could receive more if you are a smoker or if you take prescribed medicine
- Fixed-term annuities – your income is guaranteed for a set period of time, after which you or your beneficiaries will receive a pre-agreed lump sum payment
- Investment-linked annuities – your payments can vary in line with the performance of certain investments, but they usually come with a guaranteed minimum level of income
Our annuity specialists can help you
We have a team of annuity specialists who can help you to find the most suitable annuity, with the highest level of income.
We do all the hard work, from entering all of your details to researching and comparing all of the available providers. This is especially important as shopping around is essential to find the most income.
We can discuss the different types of annuities to find the best fit for you, and also talk you through the other features and benefits. These could include an income that rises in line with inflation, or a minimum period of time for which your payments are guaranteed.
Of course there is a cost for the advice, but this could be offset by the extra income that you may receive. Your initial consultation is also at our cost, and there is no obligation to take out our services afterwards. It is simply an opportunity to find out what ‘good’ could mean for you and to discuss how we could help you.
Speak to us
If you want to know more about annuities or how we might be able to help, don’t hesitate to get in touch. Call us on 020 7189 2400 or email email@example.com.
This article was previously published on Tilney prior to the launch of Evelyn Partners.