What is an Annuity?


What is an Annuity?

An annuity is an income for life and it stops when you die – so it is important to get the most value out of your pension fund when buying your annuity. There are many options/styles of annuities.

The Financial Conduct Authority (FCA) advise you to shop around, but doing this for yourself is not an easy task as you need to be able to access all the annuity rates available from all of the insurers and you need to know what you want.

Widows Pension:

Is this annuity income just for you or does it need to continue to pay an income to your spouse if you die first? If so, how much? 100% or 50% or something else?
How much would that cost and what if you buy a spouse’s income and then they die before you? You could have wasted money!


What if you should die early? You can build in some protection to your fund, but how much protection would you desire and at what cost?

NOTE: If you have a medical condition that reduces your life expectancy, you may qualify for an Enhanced Annuity. To find out more see our dedicated page: Enhanced Annuity

Level Income or Escalating

Is a level flat annuity wise? This annuity income is to be paid for the rest of your life, if you live a very long time, your annuity will lose its purchasing power over time – so should you choose an escalating annuity income? If so, how much? 3% pa, 5% pa, RPI or something else?

What if you die soon into retirement? You’ll have taken a lower starting income when you could have had a higher income and enjoyed it. The decision is not an easy one.

Here at The Pension House we will help you to prioritise your needs in retirement and will shop around for the best annuity rates on the market for you. We may find that annuity purchase is just not flexible enough to accommodate your needs, and we may advise an alternative course of action to gain some flexibility for you, or indeed, a combination of structures so your income in retirement is the best fit for you.

There is a fine balance – taking your pension income far too early will have a detrimental effect on the purchasing power of your income. So many decisions! and that is why you need financial advice from an Independent Financial Adviser. Call us to discuss your needs without any obligation or contact us online and we will get back to you at a time that is convenient for you.

Advice from an FCA regulated Independent Financial Adviser (IFA) is highly recommended. You will receive independent advice on the whole of the market, we are qualified and unbiased.


Pension from age 55

You can access your private pension/s after your 55th birthday as long as it is from a UK source. How you take your pension will depend on the type of pension scheme your money is invested in.

Cash from pension

Are you looking to take just the cash from a pension – sometimes called Tax Free Cash or Pension Commencement Lump Sum There are a number of options on how to take cash from your pension.

What is an Annuity?

An annuity is an income for life and it stops when you die – so it is important to get the most value out of your pension fund when buying your annuity. There are many options/styles of annuity.

Enhanced Annuity

An Enhanced Annuity or Impaired Health Annuity pays a higher income for those with medical conditions and for those with a smoking or drinking lifestyle that it may reduce their life expectancy.

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Pension assessment

This is where we carry out an assessment of your existing pension plan/s and forecast your benefits to retirement. We will then be able to advise whether you have sufficient savings to meet your needs.

Let's retire

Are you ready to start taking your pension benefits? We can help you to understand and consider all the options available to you at retirement and steer you through the process and help you choose the most suitable option.

Workplace pension

Struggling to attract and retain the right staff? Finding it hard to ‘talk pensions’ to your employees?
We can provide a scheme review and audit as well as helping you to communicate the pension scheme.

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