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Annuity FAQs...

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Why Use an Annuity Broker?

1. A broker may be able to get better annuity deals than you can.

They will use specialist annuity industry search software to query top pension annuity and annuity alternative providers' databases to help you compare and then choose which product is the best for your circumstances.

2. They are more likely to have access to a wider range of annuity plans and alternatives.

3. Due to their ongoing relationships with annuity providers, they may be in a better position to overcome any problems that may arise with your application.

4. You'll have an annuity expert as your point of contact to deal with everything on your behalf throughout the process.

5. They work to a strict set of guidelines laid down by the Financial Conduct Authority (FCA), the UK's financial regulator.

6. If you choose not to use an FCA authorised and regulated broker, you may not be able to get compensation through the Financial Services Compensation Scheme (FSCS) if, at a later date, you have a complaint against them.

7. There's absolutely no charge to you for our services and you're under no obligation to proceed.

What is an Annuity?

A pension annuity is an arrangement where a lump-sum investment is made and in exchange you will receive a guaranteed level of income for the remainder of your life.

Most annuities are bought using pension funds that are held in money purchase pension schemes.

So basically speaking, an annuity converts a savings fund into income and that income will be paid to you until you die.

You can buy an annuity if you have one of the following pension types:

    1. A Personal Pension

    2. Free Standing Additional Voluntary Contribution Schemes (FSAVCs)

    3. Most Additional Voluntary Contribution Schemes (AVCs)

    4. Retirement Annuity Contract (RAC)

    5. A Stakeholder Pension

    6. Section 32 Policy (Buyout Bond)

    7. Occupational Money Purchase Schemes

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What Annuity Options Are Available?

A wide range of options are available. The most widely used annuity options are:

Minimum Term
Your annuity income is guaranteed to be paid until you die, but it can also be modified to include any of the following options:

Joint life annuity - The annuity ceases on the death of the 2nd of two named annuity holders

Five year guarantee - The annuity ceases on your death, or after five years, whichever is longer

Ten year guarantee - The annuity ceases on your death, or after ten years, whichever is longer

Partner or Dependants Benefits
Your partner or dependants can be protected following your demise by choosing one of the following:
• Maintain full benefit • reduction to half benefit,
• reduction to two thirds benefit

The annuity is adjusted to the new level after your demise or, if selected, at the end of the guarantee period. It continues until the death of your spouse, partner or dependants.

Annuity Escalation
An annuity can either include an escalation at three per cent, five per cent, or at the RPI percentage (the annual increase in the Retail Price Index)or can be paid at a fixed level.

You can therefore choose to compensate for any inflationary effects that may be inflicted on your income. But you must bear in mind that if you choose escalation, your initial income level will be reduced.


Frequently asked questions and
answers about pension annuities

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Which Companies Will We Provide Quotes For?

You will receive your annuity comparisons from the leading providers, currently including:

Our pension annuity specialists constantly review the annuity market to ensure that their panel always include the annuity providers offering the highest rates.

Why Don't We Show Annuity Rates?

The Argument Against Annuity Calculators and Annuity Rate Tables

You may have already visited other annuity sites and consulted an annuity table or used an annuity rates calculator. Some possible disadvantages of this are:

• Were you sure that the annuity rates were up to date?

• Did you know that annuity brokers may have access to a broader range of retirement pension income possibilities?

• Did the table or calculator take into account all the annuity products on the market or was it just a selection?

• Did the site promote particular annuity providers above others, as higher commissions are paid by certain annuity providers?

• Are annuity providers able to pay to list their particular products higher in the comparison tables, or even have their products shown in a different, perhaps more prominent way?

• Was it an individual annuity quotation or just an illustration?

• Were you made aware that the annuity rates may change before your application goes through or, if you received a quote, was it guaranteed?

Updated By Machines Or Humans?

Did the site use 'screen-scraping' technology that retrieves and transfers information from other programmes to collect the annuity rates?

According to Wikipedia, "Screen scraping is generally considered an ad-hoc, inelegant technique, often used only as a "last resort" when no other mechanism is available.

Aside from the higher programming and processing overhead, output displays intended for human consumption often change structure frequently. Humans can cope with this easily, but computer programs will often crash or produce incorrect results."

But What if The Site Says Its Rates Are up to Date?

Even if the annuity tables were 100% up to date and correct, were you aware that the figures may have no resemblance to the income that you may actually get?

This is because your annuity may increase due to circumstances as yet unknown to the site; for instance whether you smoke, your state of health and any medication you may be taking.

Some annuity providers even base your future retirement pension income on your previous occupation, especially in the case of manual workers, or where you live.

So, let us say that you do find a website where everything works correctly and is up to date; do you know at this stage whether you want a fixed-rate, level, escalating or an RPI-linked escalating annuity? Do you know whether you qualify for an enhanced annuity?

Also, have you considered your partner or dependant's percentage on your death? Or have you thought about capped drawdown?

There are a bewildering array of annuity and retirement income choices.

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Please note that the information on this site does not represent financial advice. You must consult a qualified annuity broker for complete information.

"The Argument Against Annuity Calculators and Annuity Rate Tables" is opinion only and you should not rely on this information to make (or refrain from making) any decisions.

What if I Smoke?

If you are a smoker, annuity providers factor in that you are likely to die sooner than the average non-smoker. Therefore, they assume that they will not have to pay you your income for as long as they pay a non smoker and as a result you will receive a higher pension income.

So, as a smoker, you may already be eligible to receive a higher income, but if you also have any health problems, you may receive further enhanced rates of up to 40 per cent above the standard level annuity rates, as mentioned above.

Open Market Option

What Makes The Open Market Option
Attractive When Buying an Annuity?

Learn More

What Are Enhanced Annuities?

If you suffer, or have suffered, from ill health or are a smoker, you may be able to increase your pension income.

Annuity rates are based on life expectancy. Some annuities, called "Enhanced Annuities" or "Impaired Annuities" pay more than basic annuities, because people in poorer health tend not to live as long as those that are healthier.

The providers therefore have to pay out more over the healthier people's retirement life, so annual income is usually lower for the healthy.

This is why it is very important to report any medical condition, no matter how minor you think it is. It may result in a higher income.

You may regard yourself as relatively healthy and therefore not eligible for an enhanced annuity, but the reality is sometimes different.

Some think they have to suffer from a serious condition such as heart disease, stroke or cancer to receive extra pension income, but this is not always the case.

A seemingly small complaint or condition may increase your retirement income.

In fact, if you suffer from one of approximately two thousand health conditions, such as a digestive complaint, being overweight, high cholesterol, asthma, high blood pressure, diabetes, heart problems etc., please mention this to our team of annuity specialist as you may qualify for a higher annuity. Additionally, higher pension incomes are often achieved by:

• People who have retired from certain types of occupations, especially blue collar workers

• Smokers of 10 or more manufactured cigarettes per day

• Those who live in certain areas of the UK

It is estimated that with over 40 per cent of annuities currently sold, the annuitant could benefit from an enhanced annuity, giving them a higher annuity income for the rest of their lives.

If you believe that you fit into this category, it's important that you tell your annuity broker about it. You will stand a much better chance of a higher income for the remainder of your life. Again, if you smoke, you may also receive further enhancements to your annuity income, as below.

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