Q. What type of pension do I need to buy a pension annuity?
A. You can buy a lifetime pension annuities if you have one of the following types of pension:
- Personal pension
- Stakeholder pension
- Most Additional Voluntary Contribution (AVC) schemes
- Free-Standing Additional Voluntary Contribution (FSAVC) scheme
- Retirement Annuity Contract (RAC)
- Section 32 policy (buy-out bond)
- Occupational money purchase scheme
If you have a final salary pension then this service is not for you.
Q. How can I benefit by using the open market option?
A. You don’t have to buy your pension annuity from your pension provider. You can shop around. This is known as the Open Market Option. By shopping around you may be able to increase your income by as much as 40%, the choices at retirement are shown below:
- Stay with your Pension provider – standard rates from that provider
- Shopping around If your healthy – can yield up to 17% more
- Enhanced annuities if you have lifestyle or medical conditions – can get you up to 40% more
*The increase are based on a 65 year old man with a £50,000 pension fund,
17% is achieved comparing a standard annuity rate against the best non-enhanced annuity rate
40% is achieved by comparing the standard annuity rate against the best enhanced rate (example presumes person has high cholesterol, high blood pressure and has had a heart attack in the past)
These are just two of the most frequently asked questions and to ensure you get the best pension annuity rates you should seek advice.
