“I want a retirement income guaranteed for life”
Annuities provide guaranteed regular retirement income and allow you to budget effectively. Annuities are the traditional option for retirement – but no longer the only choice. There are lots of different types of annuities and choosing the most appropriate one will depend on:
- your circumstances (including if you’d like a joint annuity with your partner)
- your health (even if you suffer from a minor ailment like asthma, you could receive higher monthly payments with an Enhanced Annuity)
- your attitude to risk
- whether you wish to provide any funds when you die
Most ‘traditional’ annuities don’t allow unused funds to be used as inheritance, but now annuities can be arranged with additional features.
2. Flexi-access drawdown
“I want to take my money out as and when”
With a flexi-access drawdown scheme your pension fund can remain invested in shares, bonds and so on, allowing you to draw regular income from it by cashing in some of those investments. Each time you move money into drawdown, up to 25% can be taken as a tax-free lump-sum. The remainder stays invested and taxable income can be drawn directly from the pension as you wish.
While you’ll be able to choose when and how much to take out of your pension, it will be up to you to manage your spending and ensure that you have enough income to last for the whole of your retirement. Unlike most annuities, the money that is left in drawdown when you die can be passed on.