Bridging the gap with a fixed term annuity
To fill the gap, several providers are launching one-year fixed-term annuities in response to the recent post-Budget shakeup to the pensions system. The new products are designed for people at the brink of retirement who want to defer making a long-lasting decision about how they will take their pension income in retirement until new rules come into effect next year.
A one year annuity allows retirees to take their tax-free cash as well as giving them the option of starting to take pension income while avoiding investment performance risk. At the end of the term, customers can use the guaranteed maturity amount to choose the most appropriate retirement income option available once the new regulations commence next year. It’s believed by many industry experts that some people approaching retirement will want to wait to see what new choices might be available to them in April 2015. Fixed term one year annuities are intended to cater for this client group, as one of the key features of this type on annuity is its flexibility.
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