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    Pension Annuities Direct

Pension Annuity FAQ

I opted out of State Earnings Related Pension Scheme (SERPS or SP2) and I keep getting annual updates what should I do?

The updates will let you know how much this part of your pension fund is worth and as with all other pension funds you can access this money once you are over 55 years old. You can use this money to purchase a pension product such as an annuity in its own right or you can put it with any other pensions to take advantage of a bigger fund to purchase your pension product.

What should I do once I have received a wake up pack from my pension company?

Your pension provider will send you a letter about 6 months before your pension is due to be taken. On this letter it will clearly mention the open market and your right to use this option. We strongly recommend that you use the option as in most cases specialists such as ourselves can get you a better solution for you including better annuity rates.

What is the regulation regarding small pension schemes?

If you have a pension fund that is valued at less than £30,000 and you have no other pension schemes either in payment or not you are entitled to take all of your pension fund under the Government Triviality Clause. This currently enables you to take a maximum of £30,000 as long as you are over 60. 

What is the life time allowance?

There are limits upon what can be paid into a pension scheme. The lifetime allowance dictates what you are allowed to ultimately have in a pension scheme before these benefits are taxed.The current lifetime allowance is £1,500,000 and this will reduce in 2015 to £1,250,000.

At what age can I take my pension?

The Government set an age that you are allowed to take your pension and currently that is set at 55 years old. This is subject to change by the Government and they can do this at any time. This needs to be considered if you are delaying taking your pension.

Is it worth deferring taking my pension annuity?

The timing of taking your pension is an important one. You would think that by waiting for a year or so would make sense but sometimes it does not. Certainly a lot of people once they are aware of the impact prefer to have the benefit earlier. Please call us to discuss.

Do I have to take an annuity with my current pension company?

No you can use your Open Market Option and it is very important that you fully explore these options. An Open Market Option is what the pension providers have to offer. You are allowed to buy a retirement product through another provider. Shopping around can make a significant difference and we could achieve as much as 50% more money for the rest of your life. We use the “whole of the market” to achieve the best rates for you. We strongly suggest that you take this option.

What is an open market option?

An Open Market Option is what the pension providers have to offer. You are allowed to buy a retirement product through another provider. Shopping around can make a significant difference and we could achieve as much as 50% more money for the rest of your life. We use the “whole of the market” to achieve the best rates for you. We strongly suggest that you take this option.

How do I take an open market option?

The most effective and easiest way is to use a specialist pension annuity company such as ourselves. We complete the whole process for you, including providing sufficient information to enable you to select the right options. We shop the market for you identify the best rates from only the best providers. We complete all the paper work for you and deal with all enquiries.

How can I buy a pension annuity?

The most effective and easiest way is to use a specialist pension annuity company such as ourselves. We complete the whole process for you, including providing sufficient information to enable you to select the right options. We shop the market for you identify the best rates from only the best providers. We complete all the paper work for you and deal with all enquiries.

How do I achieve the best annuity rates?

The best way is to utilise a specialist pension annuity company to act on your behalf. We shopping the whole of the market for you and provide the information for you so that you can select the most suitable product for you.

How financially safe is my annuity company?

We only deal with the best companies and most secure companies. The new EU legislation has meant that all companies have had to increase their ability to pay out in the future. As well as this all the annuity companies that we deal with are covered by the Financial Services Compensation Scheme which will pay out 90% of the income with no upper limit.

How can I protect my pension annuity against inflation?

The only real way to protect you fund from inflation is by taking escalation.

What are protected rights and non-protected rights?

If you have a statement showing both protected and non-protected rights it means that you at some point contacted out of the Government Second State Pension (SP2). Prior to April 2012 you would have had to have a pension annuity with certain constrictions an example being that you would have to have taken 50% spouse cover. Since April 2012 there are no longer any differences between protected and non-protected rights. You can use both to purchase the type of annuity you wish.

Do I have to take an annuity with my current pension company?

No you can use your Open Market Option and it is very important that you fully explore these options.

Do I need to stop working before I take a pension annuity?

No you can continue to work. Your pension can be taken from any time after you are 55 and you can use it to supplement your income if you wish or you can give up work. If you are in a company scheme you cannot normally take your pension with that company and continue to pay in to it.

Do I pay Tax on my retirement income?

Yes you pay tax at your normal rate dependant on your levels of earnings.

How do I pay tax on my retirement income?

The pension annuity provider will normally take the tax from your income. You therefore receive your pension net of tax. If you have fully retired and can provide a P60 the pension provider will normally adjust you income accordingly. Any over or under tax payment will need to be notified to HRMC in the normal way.

How does my income get paid?

Your income will be paid directly into the bank or building society account that you wish at the frequency that you have requested.

What affects annuity rates?

Annuity rates are affected by a number of factors. The economic factors include, interest rates, gilt prices and more commonly now equity prices. The demographic factors include your age and the average life expectancy. Whilst the economic factors may become more favourable in the future the demographic factors with the expected longer life expectancy will probably put downward pressure on the annuity rates. Therefore we may not see the full benefits of improving economic circumstances as they may not provide sufficient weight to fully combat the demographic factors. It is unrealistic to see annuity rates at the levels they have been in the distant past.

What happens to your income if you die?

If you have taken out a joint life annuity the income agreed at the start ie. 50% spouse, will be paid to your dependants for the rest of their life. If you have taken out a Guaranteed Period the money is paid into you estate for the remaining duration of the Guaranteed Period. If you have taken neither of these options your income payments will stop.

With some annuity options you can take plan protection which can protect your fund. Please contact us for details

I have more than one fund can I consolidate them into one pension annuity?

Yes and this is normally the best option, we can help you with this. It is important that you do not lose out on any guaranteed rates. Please contact us for further information.

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Case Studies

  • Mr T earned 21% MORE Pension Income

    Mr T was 55 years old and had a pension pot of £200,000. He wanted a single life annuity with a guarantee on the policy but no escalation. He has some lifestyle conditions and health issues, he is a heavy

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  • Mr H earned 29% more pension income

    Mr H was 60 years old and had a pension pot of £30,000. He was a smoker and is taking medication for Cholesterol, although his readings were fine and he also suffered with vertigo. He wanted a single life annuity

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