Until recently annuity rules stipulated that if you had a pension fund at age 75 you were obliged to use it to purchase an annuity (compulsory purchase annuity). As from April 2011 the Treasury has removed this rule due to in its opinion “unnecessary restrictive and outdated rules applying to annuities and income drawdown arrangements” which means that individuals will no longer be forced into vesting a pension fund when it doesn't suit them.
This legislation means that individuals have the choice of keeping pension funds invested or opting for swapping their fund (s) for an annuity which provides a guaranteed income for life. Whether an annuity is right for you will depend on your personal circumstances. Once you buy an annuity there is no going back so getting the decision right is critical.
When you reach your nominated retirement age e.g. 65 your pension provider will provide you with an annuity offer. It is important to understand you are not obliged to accept this annuity offer and you have the right under the oprn market option rule to either move the fund to another annuity provider or into a pension drawdown arrangement.
To properly assess your options you should seek independent advice.
You should shop around to compare annuity plans to find the best quote - use our service below: