One way to use your pension pot is to buy an annuity. This gives you a regular retirement income \u2013 usually for the rest of your life. In most cases, this is a one-off, irreversible decision, so it\u2019s crucial to choose the right type and get the best deal you can.
\nUntil recently, most people with a defined contribution pension (based on how much has been paid their pension pot \u2013 also known as a \u2018money purchase pension\u2019) used their pot to buy an annuity. However, you can now access and use your pension pot in any way you wish from age 55.<\/p>\n
You don\u2019t have to buy an annuity from your pension provider \u2013 you can shop around on the open market to help ensure you get the best deal and options for you.<\/p>\n
Decide on the type of annuity you want<\/strong> Within these types, you have several options for how you want the income paid. It\u2019s important to choose the right annuity type and income options for your circumstances and pension pot.<\/p>\n Higher income for poor health or lifestyle<\/strong> Check what your pension provider is offering<\/strong><\/p>\n At least six weeks before your retirement date, your provider will contact you with: It\u2019s important to check whether your agreement with your provider includes a guaranteed annuity rate (GAR). These can be very valuable, as they can offer much better rates than those generally available. A GAR might come with restrictions but can lead to a significant boost to your retirement income.<\/p>\n The retirement income that your current provider offers you is your starting point for finding out if you can get a better rate elsewhere.<\/p>\n Discuss your options<\/strong> You should discuss your findings with a professional financial adviser before choosing an annuity.<\/p>\n","protected":false},"excerpt":{"rendered":" A regular retirement income for the rest of your life One way to use your pension pot is to buy an annuity. This gives you a regular retirement income \u2013 usually for the rest of your life. In most cases, this is a one-off, irreversible decision, so it\u2019s crucial to choose the right type and … Continue reading “Buying an annuity”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.sound-financial.co.uk\/news\/index.php?rest_route=\/wp\/v2\/posts\/2276"}],"collection":[{"href":"https:\/\/www.sound-financial.co.uk\/news\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sound-financial.co.uk\/news\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sound-financial.co.uk\/news\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sound-financial.co.uk\/news\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2276"}],"version-history":[{"count":0,"href":"https:\/\/www.sound-financial.co.uk\/news\/index.php?rest_route=\/wp\/v2\/posts\/2276\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sound-financial.co.uk\/news\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sound-financial.co.uk\/news\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sound-financial.co.uk\/news\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nChoosing an annuity is about more than getting the best value on the market. There are different annuity types (ones that pay an income for life \u2013 including basic lifetime annuities and investment-linked annuities \u2013 and \u2018fixed-term\u2019 annuities that pay an income for a set period).<\/p>\n
\nIf you have a diagnosed medical condition or poor lifestyle, you could qualify for a higher retirement income from an \u2018enhanced annuity\u2019. So don\u2019t hide your health problems or unhealthy lifestyle. It pays to tell your provider \u2013 and other providers when shopping around \u2013 if, for example, you\u2019re a smoker or have high blood pressure.<\/p>\n
\nDetails of the value of your pension pot
\nAn indication of the retirement income your pot would generate if you bought a basic lifetime annuity with it<\/p>\n
\nIn most cases, choosing an annuity is a decision that will determine your income for the rest of your life, so it\u2019s extremely important to make the right choice.<\/p>\n