Planning for retirement is key to securing enough income to live out the rest of your life. A pension annuity is a plan that pays you a regular guaranteed income for the rest of your life, no matter how long you live.One option is to convert the pension pot you’ve built up into a regular income. You can do this by buying what is called a pension annuity or an ‘annuity’. With a pension annuity, you’ll know exactly how much you’re getting for life.
You can add several options such as:
Guarantee periods; The “guaranteed period” for an annuity is the initial period for which the annuity is guaranteed to be paid regardless of whether or not the individual dies during that specific period of time Escalation; An option for your retirement income to increase in line with an inflation index, or to increase at an agreed fixed rate each year. (Also known as index-linked annuity or inflation-linked annuity). Spouses Pension; These will pay an income to your spouse, registered civil partner or dependant after your death, usually at a lower rate.
You can usually choose to get your income monthly, quarterly, half-yearly or annually, however once an annuity is set it it cannot be amended.
Risk Warning: A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation