When it comes to retirement we all want to make sure that we have an ample amount of cash saved to spend as we please on holidays and most importantly our grandchildren! For this reason, making sure that you do your homework about annuities, however painful and confusing it could be, can really pay off in a long term scenario.
This annuity stuff – it’s confusing!
It’s easy to be confused and overwhelmed when it first comes to looking at annuities. Pensions are big business and there are so many companies out there trying to promote their own packages that frequently we feel overwhelmed by information, which in many cases we don’t really understand.
Picking the right annuity package can seem like an incredibly daunting task and with the added pressure of a lifetime lock in clause, we can really feel like we need to make the right decision to affect our income for what could be the next 30-40 years.
What should I really be looking at?
At the end of the day you take out an annuity for one reason – to make yourself money, and you want to make sure that whatever package you choose, it works for you. You need to take into account your health situation and any other factors that might affect your pay out. If your health is poor and you have poor lifestyle habits then you may be eligible to claim an enhanced annuity which could ensure you a larger pay out over a shorter period of time.
Why should I shop around?
In reality shopping for an annuity is just like shopping for a new pair of shoes, or an item of clothing – we like to window shop and work out exactly what we want and then we search through a number of different retailers until we find a price that we are happy to settle for. Research has suggested that retirees could make a saving of up to 40% by simply switching their choice from their pension provider to an alternative annuity provider.
I thought I had to keep my pension provider?
Not at all! In 1975 the UK Government introduced a law to promote fair competition between all pension providers, ensuring that everyone was able to pick and choose between different companies to gather a better rate for their annuity. So despite the fact that you may have held your pension with one company for your entire life, when it comes to annuity time you are free to leave them and take up with another company offering you a better package.
The Annuity Specialist are qualified UK annuity advisors and have over 40 years collective experience in the financial services market.