Annuity Advice: What Happens To My Annuity If I Die?
Annuities are guaranteed to be paid to you until you die. When you die, your annuity will cease, unless you take the relevant steps. Opt for a joint life annuity if you would like your partner to be paid after you die.
Annuity Advice: How Frequent Will My Payments Be?
People often ask about annuity payment frequency, and how often they can expect to receive payments in retirement. You can choose to take payments at any frequency, as long as it is at least once a year.
Annuity Advice: What is Inflation?
Inflation is an increase in a cost of goods and services, measured in a number of ways. Inflation can affect your annuity, and it pays to understand how it can impact your retirement income.
Annuities Advice: Escalation?
Escalation is an increase to your pension or annuity once it is in payment. Level incomes don’t increase – they remain the same.
If you would like to see your annuity increase in payment every year, you can link this to RPI, CPI or at a fixed-rate e.g. 3/5%. These annuities will pay significantly less in the first few years in order to allow for higher payments later on.
Annuity Advice: What is Tax-Free Cash?
Pension commencement lump sum (PCLS) is the tax-free lump sum that you are legally entitled to take upon retirement. You are allowed to take up to 25% of your pension pot at the time of converting it into an annuity. The remaining 75% will be used to make regular payments to you in retirement.
The Financial Conduct Authority (FCA) produced a report called the Retirement Outcomes Review (MS16/1.3) in June 2018 which commented on how benefits were being taken since the Pension Freedom and Choice legislation was introduced in April 2015.
This will effect you if you have a deferred Final Salary Pension plan or Defined Benefit Pension. If you are a deferred member, i.e., you have left your employer but the pension is not due for payment until your normal retirement date (65?), your right to a Cash Equivalent Transfer Value (CETV) may be affected.
Using a Fixed Term Annuity or Drawdown will allow you to access 25% of your fund as a tax free lump sum and leaves the remainder of your benefits to be accessed under the further changes proposed from 2015. Therefore, in the interim, this leaves the door open for your options.