Prior to 2006, in the UK, most pensioners had no choice but to buy an annuity by the age of 75. In 2006 that law was changed slightly to give people different options. In 2011, the rules once again changed. Provided you have an adequate income you are not forced into buying an annuity. However, the vast majority of people will fall below the threshold of £20,000 a year income from other sources that allows them not to buy an annuity.
Even those who have income of £20,000 or more a year from sources, such as their state pension and a salary, may still benefit from buying a pension annuity. This is mainly because of inheritance tax rules which mean that if the investor dies after their 75th birthday any money left in their pension fund will be liable to a 55% tax.
Buying a Pension Annuity
As you can imagine, buying a pension annuity is a very important decision. How much the annuity you buy will pay out and for how long will drastically affect how well-off you are. Effectively, a large majority of your income will come from your annuity. This means that shopping around and getting a good deal is very important.
If you do not know much about annuities it makes sense to read up about them before you begin the shopping around process. If you are due to retire it is wise to begin your education early at least a year before your retirement date. That way when you actually come to buy an annuity you will be familiar enough with the different kinds that are available to make an informed decision. You may also, in the process of your research, begin to narrow down the list of firms that you are interested in buying from.
The best way to find a good value pension annuity is to use a comparison service like the one offered by Age Partnership. On their website you can compare the annuity rates across the leading retirement income providers in the UK, so that you can make a more informed decisiom
Visit the Age Partnership website today to get a detailed pension annuity quote or call them, if you wish, on (0800) 975 5151.