Choose an Annuity sooner rather than later!

Annuity rates have been low for quite some time now. Last year, in August, annuity rates reached record lows and have not recovered significantly since. In this economic climate, does it make sense for pensioners to delay investing in an annuity in the hopes of better annuity rates? Or does it make more sense to choose an annuity that best suits your needs at the moment and commit to it?

The fact is that annuity rates are constantly dropping, and although small fluctuations can occur, waiting for any significant improvement in annuity rates may mean that you lose out on better rates today. Experts have warned customers not to dither and wait for rates to go up, and to shop around for the best rates and choose an Annuity sooner rather than later.

There may be small fluctuations in annuity rates, but waiting for these small rises will only mean that you lose out on the income you could have received by investing in an annuity sooner. When compared to the level of rises that we have seen recently, waiting could mean you lose out on much more money than you gain from the increase in rates!

The key to making the best of the annuities available today is to shop around for the best deal and choose an annuity that best suits your needs. A surprisingly large number of people are not aware of their right to shop around on the open market and therefore simply accept the deal they get from their pension provider. Research shows that shopping around could mean getting up to a whopping 46% more income than you would with your existing pension provider.

There are several types of annuities available on the market – from investment linked annuities, level annuities, inflation linked annuities, to enhanced or impaired annuities. In case of couples you can also choose an annuity that guarantees income or a lump sum payment to the surviving partner – also known as joint annuities. You can have protection against early death by including an early death clause that guarantees payment to your beneficiaries.

There are many ways in which an annuity can be used to optimise your savings and make the best of them during retirement. The key is to choose an annuity sooner rather than later – at least in the short term – and to shop around for the best product that suits your circumstances and priorities.

Compare Annuity Providers and their Annuity Schemes

One of the factors that often gets lost while comparing financial and investment products is: who is the provider of the product? What is the provider’s standing in the industry? People increasingly compare products and shop around to find an annuity that works well for them, but a large proportion of us are not aware of how important it is to compare annuity providers as well.

It is fairly easy to compare annuity schemes, thanks to the multitude of comparison websites, and other tools and resources that are readily available today. However, it is not so easy to compare annuity providers. Comparing different insurance companies means having to learn more about each company and making sure that it is duly qualified, licensed and regulated by the appropriate bodies.

When you compare Annuity Providers, there are certain things to look out for. Always make sure that the annuity provider is well established within the industry – if not particularly in the annuity sector, then within the finance sector. Having a significant reputation to protect means that the company is much more likely to play by the rules and offer a fair deal, than a company that has nothing to lose.

The Financial Services Authority (FSA) – which was the regulatory body and watchdog for the financial industry in the UK, has now been replaced by two different ombudsmen – The Financial Conduct Authority and The Prudential Regulation Authority. The FCA is now the watchdog and regulator for the financial sector and does the job of making sure that the industry remains fair, ethical and healthy. It promotes competition between providers and ensures that customers are protected at all times.

So, when you compare annuity providers, always make sure that you select a provider that is regulated by the FCA. This will ensure that the provider is accountable to the Financial Conduct Authority and must therefore follow by its rules. This layer of accountability is absolutely essential; as it means that as a customer you have the additional protection from future malpractice or fraud.

Choosing an annuity is one of the most important decisions in life – as once purchased, an annuity can usually not be cancelled or returned. It is therefore important to make a considered and well informed choice. In order to make an informed choice, it is important not only to compare different annuity products and shop around on the open market but also to compare the annuity providers.

Free Annuity Specialists Who Will Help Compare Annuity Rates

Annuity specialists and Independent Financial Advisors (IFA) can offer impartial and unbiased advice about the different annuities available on the open market. They can help you compare Annuity rates, compare different products, and understand the different types of annuities and choose a product that can best suit your individual circumstances and needs.

Professional independent financial advisors offer their services based on two types of payment – either an upfront fee, or a fee in the form of a commission. Upfront fee rates can range from £75 to £250 per hour depending on the location, type of advice etc. While an upfront fee is paid as a single upfront payment for the consultation and advice, a commission fee is paid only when you actually decide to buy an annuity through the advisor.

This means that you can receive free independent and impartial advice not just to compare annuity rates, but potentially until you need it, and until you have made a decision. The IFA is paid only when you buy a product through them. Irrespective of whether you agree to an upfront fee or a commission fee with your advisor, an independent financial advisor is qualified to offer completely unbiased and impartial advice and help you choose the most suitable product.

While an independent financial adviser can certainly help you compare annuity rates and find the best deal, there is yet another good reason to consult a financial adviser while choosing an annuity. Professional financial advisers often have access to exclusive deals and offers directly from the providers. These deals may not be available on the open market to customers, unless you buy the product through an adviser.

It is always a good idea to compare different advisers and choose one with the most experience and professional credibility in the field. Personal recommendations and references always help. But do not be afraid to shop around online, or locally too. Always make sure the independent financial adviser you choose is truly independent and not tied down to a particular company or companies.

If you are not sure if annuities are the right option for you and need independent advice about the best solutions for your circumstances, look for advisers with a broad field of expertise, rather than just an annuities expert. Unlike a specialist within a narrow area, a financial adviser with knowledge of the entire sector could help you explore more options and make the best decision.

Whether you need to compare annuity rates or simply need some friendly yet professional advice about your finances – an independent financial advisor could help you.

How Best to Compare Annuity Rates?

Once you reach the age of 55 you will begin to think about how best to make your retirement savings last for as long as you will need them. This is a difficult proposition, and there are many options that are available to you. About six months before you retire you will be sent an information package by your current insurance company. In this package will be information about the annuities that they have to offer. However, it is in your best interests to compare annuity rates.

If you are even considering taking out an annuity then the worst thing you can do is take the first annuity offer that you get; you absolutely have to compare annuity rates. The first reason is that once you have bought an annuity you cannot get your money back, and the second reason is that if you are going to try to take care of yourself financially for as long as possible you will have to find the best annuity rate to get you through the rest of your life. This is why you have to compare annuity rates.

But what is the best way to compare annuity rates? A good place to start is with annuity calculators. Most annuity providers have these on their websites and with a bit of personal information they can give you an idea of the kind of annuity rate that you can expect from them. These quotes are not guarantees, only a guide. So the next step to compare the best annuity rates is to get an actual quote from the annuity provider. There is also another way to compare annuity rates and that is to go to independent annuity observers like the FSA and have a look at their rates.

By deciding to compare annuity rates in this way you will have an idea of all the annuity rates that are available and what the various annuity providers have on offer. Each annuity provider will have something slightly different to offer and slightly different annuity rates and of course you will want and need the best annuity rate, and annuity package that you can find. Shopping around and making the effort to compare annuity rates is not a waste of time, it is preparing for your future. So take the time and go through the various steps until you find an annuity rate that works best for you.

Are you a Baby Boomer looking for Annuity Solutions?

For baby boomers, retirement is quickly approaching. With retirement, come several questions as to how retirement can be funded, how the lifestyle to which consumers have grown accustomed can be maintained even after the working years have ended. However, there are options available to consumers, including baby boomers that are looking for ways to retire comfortably and quickly. Two of the most prevalently used options available to baby boomers are annuities and equity release schemes, both of which could potentially help consumers retire comfortably and on their terms. Between both of these retirement options, each consumer should be able to find a way to retire that fits their individual and unique needs.


There are several different types of annuities available to consumers, each with their own set of advantages and disadvantages.  However, most of them operate similarly in that the consumer trades in their pension savings in return for income that is guaranteed for the rest of their life.  The income is guaranteed and relies most substantially on the pension savings that has been accrued by the consumer. Once the consumer has chosen their annuity, no alterations may be made. That is to say that the consumer needs to ensure that they are making the right decision when they choose their annuity. With so many options available, the choice can be challenging but it can also be worthwhile in that it guarantees a certain level of income for a predetermined period of time, most often the lifetime of the insured.

Equity release

Equity release schemes are another options available to baby boomers, and any other consumers who are nearing their retirement years. Equity release schemes are available to those UK homeowners who are aged 55 or older. The purpose of the scheme is to allow the consumer to receive tax-free cash from the value of their home. This cash can be spent however the consumer sees fit. It works best for those consumers or baby boomers who are looking for a tax-free lump sum to help fund retirement, the ability to release cash whenever most needed, or the freedom to spend cash independently.

Regardless of how baby boomers choose to fund their retirement, whether it be through equity release mortgages, annuities, or other investment strategies, they should always consult with a financial adviser before investing in any particular strategy in order to ensure that the decision is the best one possible for each baby boomer’s individual and unique retirement needs.

What is an Annuity Calculator?

For those consumers who plan on purchasing an annuity with their pension savings, an annuity calculator can be a very beneficial and useful tool. An annuity calculator is a guide used by consumers to help gauge exactly what type of income they can expect to be paid to them once they have retired. There are several factors used to determine income amount and the annuity calculator takes these factors and computes a reasonable estimate of income. While the number is truly just an estimate, it can be used by the consumer to better plan for the future. This means more accurate budgeting and planning for after the working years.

Consumers should always consult with an annuity calculator, most of which are free and easily accessible on the internet, before making any kind of retirement or investment decisions. This is because the annuity calculator can help the consumer to better understand what they can expect from their retirement. This proves incredibly beneficial to the consumer, especially the consumer who does not truly understand how their annuity works or what amount of income they should expect from their built-up pension savings.

Most annuity calculators ask for the same information in order to compute income amount. Fields include such factors as age, health status, and estimated current pension value. Having an annuity calculator determine estimated income amount is crucial for any consumer who is looking to use their pension savings to fund an annuity. Most consumers need to at least have some kind of understanding of what their income will be once they have ceased working. This allows for more sensible planning and investing. For those consumers who are diligent in their planning, consulting with more than one annuity calculator can help to better estimate retirement living. It can determine the accuracy of the estimate and allow consumers to rest assured that they have a grasp of what their financial future may be once they have retired.

For consumers who use an annuity calculator to help estimate their income after retirement, they must keep one crucial fact in mind. Annuity calculators should truly only be used as a guidance tool. They are not perfect and they do not always compute the exact income amount that can be expected, especially given that there are so many different annuities, all of which have different advantages and disadvantages and some that will even pay out more over an expected shorter period of time, such as an enhanced annuity. Despite the idea that annuity calculators can only give income estimates, they are truly worthwhile and beneficial for those consumers looking to better manage their retirement years.

What are Pension Triviality Rules for Small Pension Pots

Many consumers who have smaller sized pension pots would ultimately like to withdraw their pension in one lump sum payment. This one lump payment can often come in quite handy for many consumers who are on the verge of embarking on their retirement years. They are able to pay off debt before retiring, fund a vacation, or even put some money in the bank for any future emergencies that may arise. However, there are rules that govern how the lump sum can be taken and under what conditions it is actually possible to do so.

In order for a consumer to take their pension pot as a lump sum, they must be at least 60 years of age. The qualification for taking the lump sum also depends on the size of the pension pot in that only smaller sized pots can be taken as a lump sum. A consumer may qualify if one of their pension pots is worth £2,000 or less. They may also qualify for the lump sum if the total of all of their pension pots equals £18,000 or less. If the pension pot is £2,000 or less there are some very specific rules that need to be followed in order to extract the funds as a onetime lump sum payment and these rules depend on the pension scheme used.

For those whose total of all pension pots equals £18,000 or less, the consumer may be able to take all of their pension pot contents as a lump sum. This can be done even if the consumer has started to take from one of their pensions. This kind of lump sum is referred to most often as a “trivial” lump sum, or a “trivial commutation”.  There are guidelines by which consumers can take their payment as a lump sum under this scheme. First, the consumer has to remove all of their savings from each one of their pension pots, if more than one, within the same pension scheme as a lump sum. These cannot be broken out or paid out individually. They can be paid out separately only if they are from different pension schemes. Secondly, the consumer must have all of their pension pot savings valued on the same date, which is not to exceed three months out from the date they would take their lump sum. This is to ensure that the valuation is accurate and still within the guideline parameters.

If a lump sum is taken by the consumer instead of their small pension before they began to get that pension, only 75% of the lump sum is eligible to be taxed. However, if the consumer had already been getting payments from their pension and then decided to take the rest as a lump sum, the entire lump sum payment is eligible to be taxed.  The amount of tax paid by the consumer will depend on their total income for the year.

In order for a consumer to take all of their pension pot as a lump sum, they should contact their pension scheme administrator to ensure that their scheme allows for a lump sum payment. Then the consumer will be able to have their pension pot(s) valued to ensure that they meet the criteria and eligibility for removing their pension contents in the form of a onetime lump sum payment. For many consumers, receiving the lump sum, if eligible, can be incredibly helpful when trying to fund retirement years. It can be used to pay off debt, fund a vacation, or be used to ensure that healthcare or long term care is in place.