imperial Chartered Independent financial advisers

Annuities

Annuities are a type of pension product that you buy with part or all of your pension pot. An Annuity will provide you with a regular income until a set time or until you die. 

When you buy an annuity, you can take up to a quarter (25%) of the amount as tax-free cash. You can then use the rest to buy an annuity; the income you receive is taxed as normal income.

Annuities are products sold by insurance companies. There are two types of annuities you can purchase:

  • Lifetime annuities –Pays you an income for life and also pays a nominated beneficiary an income for life after you die.
  • Fixed-term annuities – Pay an income for a set period of time and then a ‘maturity amount’ at the end that you can use to buy another retirement income product or take as cash.

Much like other types of insurance the income you will get from an annuity will depend on several things:

  • Your health
  • The size of your pension pot
  • Annuity rates
  • Where you’ll be living when you retire
  • Your age when you buy your annuity
  • The income options and features you choose

Once you buy an annuity, you won’t be able to change your mind, so it’s important to discuss this option with an adviser. 

An annuity is just one of several options you have when you retire. Pension freedoms mean you now have more flexibility to use your pension pot how you like. To discuss your wealth preservation strategies speak to one of our advisers today.

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