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 As from April 2011 the Treasury has removed this rule due to in its opinion “unnecessary restrictive and outdated rules applying to annuities and income drawdown arrangements” which means that individuals will no longer be forced into vesting a pension fund when it doesn't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:
Important Risk Information:
This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.
Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.