Guide to buying an annuity · Lifetime annuities Investment-linked annuities Purchased life...

Guide to buying an annuity

Guide to buying an annuity2

Call 01737 233413 or visit onlineannuityplanner.com/hubfs/v1/planner

You now have more choice than ever before when it comes to using your pension savings. Of course having more options can make it difficult to know what’s best for you.

An annuity is the only financial product that offers you a guaranteed income for life and you can structure it to suit your needs. You may want to protect your income against inflation or perhaps provide for your loved ones.

On page 10 of this guide you can explore the different ways to personalise your annuity income.

What’s more, you don’t have to buy your annuity from the company looking after your pension savings. By shopping around and providing details of your health and lifestyle, you could get more retirement income.

Whether you’re simply researching options or you’re looking for a better guaranteed income, this guide’s designed to help. And, if you’d like more support or just have a question or two, you can always give us a call on the number below.

To compare annuities and get the best rate, try our online annuity planner at onlineannuityplanner.com/hubfs/v1/planner. It could help you achieve a higher level of income for your retirement.

Welcome to our guide to buying an annuity

Did you know?The Financial Conduct Authority (FCA), the industry regulator, have put in place ‘information prompts’ to help consumers understand whether they are getting the best annuity rate on the market. This means all annuity companies have to provide a reminder alongside every quote, which will help people be better informed and encourage them to shop around.

https://www.onlineannuityplanner.com/hubfs/v1/planner





1. Things to consider as retirement approaches 4-5

How long could you live?

Money and budgeting

Consider the value of your current pension pot

Find out how much you are entitled to in State Pension and other benefits

Will the lifetime allowance affect you?

Debt and bankruptcy

Divorce

2. Get a clear picture of your pension pot 6-7

Tracking down old pension schemes

Personal pensions

Workplace pension schemes

Guaranteed annuity rates

State Pension

Other savings

3. Find out more about types of annuity 8-9

Lifetime annuities

Investment-linked annuities

Purchased life annuities

4. Structure your annuity to suit your needs 10-15

Take a tax-free cash lump sum

Arrange when to receive your retirement income

Protect your income against inflation

Provide for your loved ones

5. How to use our online annuity planner 16

6. What happens when you apply for an annuity? 17

7. Other ways you can get a retirement income 18

Contents




Entering retirement can be quite an upheaval. Making a few preparations now could help make sure everything’s in place when you come to that next phase of life.

1. Things to consider as retirement approaches

Here are some things you’ll want to think about.

Q Will you be ready to retire completely or would you rather keep working in some capacity?

Q How much income will you need in retirement?

Q How can you add to your pension pot in the final year before you retire?

Q What will your final pension funds be worth and how much State Pension will you receive?

Q Will you be entitled to any state benefits?

Q Does the lifetime allowance affect you?

Q How will your personal circumstances affect your income?

Q Do you have any debts that may affect your retirement?

How long could you live?It’s important to consider how long your retirement savings may need to last, especially as we’re generally living longer these days. Even if you decide to retire in your 60s, you could be retired for another 30 years, so it’s worth bearing this in mind when you are thinking about giving up work completely.

If you have a serious illness which means you aren’t expected to live for more than one year, under government regulations you may be able to receive some or all of your pension savings in one tax-free lump sum. You will need to provide suitable medical evidence.

It’s really important that you get specialist advice from a financial adviser. This will involve a detailed conversation about your pension so the adviser can understand your current circumstances. This should help you make the best use of your tax-free lump sum and remaining pension savings, by making sure you you get the best advice about your pension savings and your illness.

A financial adviser can help you with all the paperwork to transfer your pension savings into the most suitable products.

If you are looking for a financial adviser, you can find one at unbiased.co.uk

Money and budgetingKnowing what your future income and costs will be can help you see what your retirement looks like from a financial perspective. Can you afford to retire now, or do you need to wait a while? To plan things properly, you’ll need to know what pension savings you already have.

Based on the information you give about yourself, our online annuity planner will offer you a range of personalised annuity quotes. This lets you know what retirement income you could receive for life, so you can plan your retirement with confidence.


https://www.unbiased.co.uk/



Consider the value of your current pension potYour pension provider should send you a statement each year telling you the value of your pension pot. You can ask them at any time to tell you about the annuities they offer and explain your options. You may want to take some tax-free cash from your pension pot for example.

It’s possible to have more than one pension pot – so you’ll want to make sure you’ve considered them all. If you’re not sure where your pension pots are, you can contact the Pensions Tracing Service. See page 6 for details.

Find out how much you are entitled to in State Pension and other benefitsYou need to know how much your State Pension will be – and find out about any benefits you could claim. Remember, your State Pension payments may not start the day that you retire. You’ll want to include the right start date in your budget. You can read more about the State Pension on page 7.

Taking money from your pension savings may affect any means-tested benefits you receive.

If you think that this may apply to you, contact the Department for Work and Pensions or Citizens Advice.

Will the lifetime allowance affect you?The lifetime allowance is a limit on the total amount you can take from your pension savings without having to pay extra tax. The limit for the current tax year (2019-2020) is £1,055,000.

You can work out whether the lifetime allowance is likely to affect you by calculating the total value of your pension savings. For more information, contact your pension provider.

If you work out that you will be affected by the lifetime allowance, we strongly suggest you ask a financial adviser for advice.

For more information on the lifetime allowance, visit pensionsadvisoryservice.org.uk

Debt and bankruptcyIf you have any debts, the people or organisations you owe money to (your creditors) may be able to make a claim on any money you receive from your pension savings. This includes any bankruptcy orders that you may have.

Your creditors may have rights to any money you take from your pension savings until your debts are paid in full. If you’re thinking about using part or all of your pension savings to pay debts, we suggest looking at your options and getting financial advice.

We strongly suggest checking with your creditors or speaking to the person managing your bankruptcy (your ‘trustee’) to find out whether taking your pension will affect your debt arrangement. It’s important to check if your creditors have any claim on the money.

For more guidance about debts, go to pensionsadvisoryservice.org.uk/about-pensions

DivorceIf you get divorced, a pension-sharing or earmarking order may be put in place. This may mean that you do not benefit from your full pension pot.

We strongly suggest that you get professional advice from a financial adviser or solicitor before taking your pension to make sure you understand how this will affect any arrangement.


https://www.pensionsadvisoryservice.org.uk/

https://www.pensionsadvisoryservice.org.uk/about-pensions

https://www.pensionsadvisoryservice.org.uk/about-pensions



You may have saved into a number of pension schemes over your working life. Perhaps you did it through your employer or your own business – or maybe you’ve set up a personal pension.

When considering retirement, you need to know the details and pot sizes of all of your pension schemes.

Knowing where all your pension savings are is critical to get the most from your combined pot. Once you have this information you’ll be able to use our online annuity planner to give you an accurate quotation.

Tracking down old pension schemesIf you’re not sure where your pension pots are – or how much is in them – here are a few tips on finding out.

• Most pension providers issue letters and statements, at least once a year. These should tell you all you need to know.

• If you haven’t received a statement, it’s worth checking with your provider that they still have your correct address details.

• If you don’t know who your provider is you can call the Pensions Tracing Service.

Personal pensionsWith a ‘personal pension’ you build up a pension fund by investing your contributions. You could then use some or all of the money in this fund at retirement.

Workplace pension schemesThere are basically two types of workplace pension schemes. Some employers offer a mixture of each.

1. Defined-benefit schemes – also known as final-salary or average-salary schemes

• This type of pension pays you a set income which is guaranteed for life. It’s based on things like your length of service, your earnings during your membership of the scheme, and the percentage of your earnings that the scheme pays for each year’s service.

2. Get a clear picture of your pension pot

Here are some questions you’ll need to answer.

Q Which providers are your pensions with?

Q When does each provider expect you to retire?

Q What type of pension do you have?

Q What is the current total value of all your defined-contribution pension plans?

Q What is the estimated value of all your defined-contribution pension plans at retirement?

Q Does your pension have a ‘guaranteed annuity rate’ (GAR)?

Contact the Pensions Tracing Service by calling them on 0800 731 0193 or go to gov.uk/find-pension-contact-details


http://gov.uk/find-pension-contact-details



• You may be able to take your benefits earlier or later than your scheme’s normal retirement date. In either case you should contact your scheme administrator to discuss these options.

• To understand how your defined-benefit scheme pension works and to estimate your likely retirement income, contact the employer that offered the scheme. They should be able to answer your questions in detail. We cannot help you with this type of scheme.

• You could transfer the benefits of your defined-benefit pension to another scheme. If this is something you’re looking to do then you’ll normally need to get financial advice.

• We recommend you always get professional advice if you’ve been offered a sum of money to give up this type of benefit.

2. Defined-contribution schemes – also called money-purchase schemes

• In this type of scheme you build up your pension fund by investing personal or employer contributions (or both) while you’re a member.

• These contributions grow to provide a pot of money, which you could use to buy a pension income.

• It’s important when accessing these funds that you make an active decision on what’s best for you. Consider your options carefully and shop around for the best deal – which could be in the form of an annuity.

Guaranteed annuity ratesGuaranteed annuity rates are special rates that some pension schemes offer. If you’ve got one of these, you may see it referred to as a ‘GAR’.

If your pension has one of these, it may mean it’s linked to a very good annuity rate. It could give you a higher retirement income than any rate currently available through the open-market option.

The downside with a GAR is that you often have no choice over the options included and it may restrict you as to when you must start taking the income.

It’s always good to compare the income generated by your GAR with that available if you shop around.

If you decide not to take up the GAR you will lose the option of the guarantee. You’ll need to get financial advice if you decide to do this.

State PensionIf you’ve reached State Pension age on or after 6 April 2016 you’ll be entitled to receive the new State Pension.

The full new State Pension for 2019/2020 is £168.60 per week. This will apply to men born on or after 6 April 1951, and women born on or after 6 April 1953.

However, the amount may be lower, depending on your National Insurance (NI) contributions. It may also change if you have previously ‘contracted out’ at any point.

You’ll usually need at least 10 years of qualifying NI contributions to get anything. You’ll need to have at least 35 qualifying years’ worth of contributions to receive the full pension.

Your NI record will decide the exact figure.

To find out more, please visit: gov.uk/new-state-pension

This link takes you to:

• information on the new State Pension, including eligibility criteria

• instructions on how to claim your entitlement and how it’s worked out, and

• the relevant details to get an estimate of how much State Pension you should qualify to receive and when.

If you reached State Pension age before 6 April 2016 then the maximum you can receive is the full basic State Pension, which for the 2019/2020 tax year is £129.20 per week.

If you don’t qualify for a full basic State Pension, you may be able to top up your State Pension to £77.45 per week if you’re married or in a civil partnership, through your partner’s NI contributions. Eligibility conditions do apply. You can find out more and check how much you’d qualify for by visiting: gov.uk/state-pension/eligibility

Other savingsYou may use all or most of your pension pot to buy an annuity. You may also have other forms of savings besides your pension pot.

These might include cash in the form of bank or building society accounts, shares, bonds, ISAs, property or a variety of other savings or investment plans. They’re all worth considering as each could help create extra money for your retirement. Or you could keep these as a rainy-day fund.


https://www.gov.uk/new-state-pension

https://www.gov.uk/state-pension/eligibility



3. Find out more about types of annuity

There are different types of annuities designed to help you, depending on your retirement income needs.

Lifetime annuitiesLifetime annuities are designed to give you peace of mind and a guaranteed income for life, no matter how the financial markets perform.

How much income will I get from an annuity?

A number of factors affect the amount you receive from an annuity:

• The amount you have in your pension pot.

• Your age.

• Whether you take a tax-free cash lump sum and, if so, how much.

• If you take an initial taxable lump sum over and above the 25% tax-free cash amount – though not all providers offer this facility.

• The annuity options you choose – things like linking income to inflation, or providing for your loved ones. You can find more information about these options on pages 10 to 15.

What about health and lifestyle?

• With an annuity, poor health and lifestyle could mean that you get a higher income. Everyone can get an income that is tailored to their own personal circumstances.

• Many providers will offer a bespoke annuity rate based on simple things, like your height and weight and postcode for where you live.

• Providers may also take into account fairly common factors such as smoking, the amount of alcohol you drink, and high cholesterol or blood pressure levels. So you could get a higher income even if you consider yourself to be ‘healthy’.

• Your income could be increased further if you suffer from medical conditions, such as diabetes through to more serious conditions such as cancer and heart disease.




Other types of annuityThere are various other types of annuity available. We have explained these below.

Our online annuity planner doesn’t offer access to these other types of annuity. If you’re considering one of these other products, you’ll need to get financial advice.

Investment-linked annuities

This type of annuity takes your pension fund and converts it into a lifetime income. Unlike a normal lifetime annuity, you choose an underlying investment and the amount of income you receive will vary in line with the performance of the investment.

Purchased life annuities

This type of annuity will pay a guaranteed income either for life or for a fixed period of time. People usually buy purchased life annuities with savings or money from an inheritance or by using tax-free cash taken from a pension fund when they retire.

A purchased life annuity gets taxed differently to a pension annuity.

If you’re considering either of these other types of annuity, we suggest you take financial advice. If you already use a financial adviser, we suggest you speak to them about the option that would be best for you.

If you don’t currently use a financial adviser, we can help you find one. Or you can visit the Personal Finance Society website at thepfs.org/yourmoney/find-an-adviser


http://www.thepfs.org/yourmoney/find-an-adviser




4. Structure your annuity to suit your needs

There are several ways that you can tailor your annuity with our online annuity planner.

Take a tax-free cash lump sumTaking a tax-free cash lump sum is a popular option.

You can withdraw this tax-free cash (also known as a ‘pension commencement lump sum’) from your pension pot before committing to an annuity. Some of the main points to bear in mind if you’re thinking of doing this are shown below.

• You can take up to 25% of your pension fund as a tax-free cash lump sum at the start of your policy.

• You can then use the rest of your pension fund to buy an annuity that generates your retirement income.

• You can take less than 25% or even nothing at all – it depends on your personal circumstances. Of course the more you take as tax-free cash, the less of your pension fund there’ll be to create an income when you retire.

Arrange when to receive your retirement incomeAnnuities can pay your retirement income at a frequency that suits you – every month, every three months, every six months or even every year. Here are some things to consider when choosing your frequency.

• You can either receive the payments upfront (in advance) or at the end of your payment frequency (in arrears).

• What you choose will depend on your circumstances. You’ll also need to consider the effect your schedule may have on your cash flow when you are retired. Less-frequent income payments will mean budgeting for longer periods.

• Payment will stop once you die unless you have included a death benefit. (See the section ‘Provide for loved ones’ on page 12).

• You may be able to vary your annuity income if your chosen annuity provider offers this option. For example, you might be able to take a higher initial income payment and then reduce it at a later date.

The diagram below shows how different payment options and timings work, and when you would receive your first payment.

Our online annuity planner will let you see the possible effect that your tax-free cash lump sum will have on your retirement income.

Explaining payment frequency and timings

January February March April May June

Policy starts

Annuity holder dies

Policy terms continue until death

All in advance£

Every month in arrears£ Every

three months in arrears

£Every six months in arrears £




Protect your income against inflationIt’s worth considering how inflation could eat into your annuity income over time. The real value of your income could gradually reduce. Many people who have retired find one of the biggest financial challenges in retirement is budgeting to live on a fixed income.

You can choose for your annuity income to stay the same each year, this is called ‘level income’. This annuity option will mean that, in effect, you receive a higher starting income, but as the cost of living (inflation) rises your income will buy you less over time.

Or, you can choose for your income payments to increase each year – by a certain percentage, or in line with inflation – using the Retail Prices Index. (If you choose the inflation option, you’ll need to call us.)

This is called ‘escalation’. You would receive a lower starting income compared with a level annuity. Then your income would increase each year to help offset some, or all, of the effects of inflation.

With escalation, if your income is linked to the Retail Prices Index, you must remember that when prices fall, your income will also fall. You can protect against this, by choosing the ‘with floor’ option or a fixed-percentage increase.

The graph below shows how the ‘level income’ option may compare with an income linked to inflation. You can see how the inflation-linked option will reduce your income initially but increase each year after this. Level income will be higher at first but won’t increase over time.

Regular income

Level

Years

3%5%RPI

Explaining inflation-proofing options

Our online annuity planner will give you quotes for different levels of inflation protection and you’ll be able to see the possible effect on your income from the available options. The planner doesn’t compare all the options – so please call us to ask about other inflation-linked options.




Provide for your loved onesAn annuity pays you a regular income for life. Then once you die, your payments will usually stop (this is known as a single-life annuity). You can add options to make sure a loved one continues to benefit from your annuity income after you’ve passed away.

Joint-life annuity

The main option for this is a dependant’s pension, also known as a ‘joint-life’ annuity. This will pay a percentage of your income, usually 50%, 66% or 100%, to a financial dependant if you die before them. The higher the percentage you choose to pay your dependant, the more your income will be affected.

Some providers offer you the option to have someone other than a financial dependant, called a nominee, as a beneficiary on an annuity plan. A payment made to a nominee is called a ‘beneficiary’s pension’.

The diagram below shows how this option works.

Our online annuity planner will give you quotes for 0%, 50% or 100% dependant’s pension so you can see the possible effect on your income.

Please call us to find out more about any other percentages (of a dependant’s pension) that you may want to get quotes on.

Explaining joint-life annuity options• At the start you can choose for a percentage of your pension to be paid to your husband or wife, civil partner,

or another person who is financially dependent on you, after your death.

• You can choose different percentages of your income.

• The higher the dependant’s pension you choose, the lower the annuity income will be.

Year 1 Year 2 Year 4 Year 5

Dependant’s death

Policy terms continue until death

Year 3

No joint-life annuity pension annuity being paid £

50% joint-life annuity pension annuity being paid

Husband, wife or partner continue being paid 50% of your pension annuity until their death £

Husband, wife or partner continue being paid 100% of your pension annuity until their death £100% joint-life annuity

pension annuity being paid

Annuity holder dies

Our online annuity planner can only provide a quotation if your dependant is aged over 50, so if your dependant is younger than this, please call us on the number below.




Guarantee period

Your annuity provider will pay an annuity income for as long as you live. But, if you’re in poor health or worried you may not get the best value, you can choose a guarantee period of up to 30 years.

This makes sure that if you die within that period, your annuity will continue to be paid to your chosen beneficiary (or beneficiaries), for the rest of the selected period. Your guarantee period starts at the same time as your annuity plan starts.

You can choose (nominate) anyone to receive the income during a guarantee period, either through your annuity provider or in your will.

Your beneficiaries may also be dependants – those closest to you who depend on you financially, such as your partner, husband, wife or children. Beneficiaries don’t have to be dependants and can be anyone you choose to receive your annuity income during the guarantee period.

The diagram below shows how this option works.

Explaining guarantee periodsAt the start you can choose to include a guarantee period, which will start at the same time as your annuity plan starts. If you were to die before the end of the guarantee period, payments would continue to be made to your nominated beneficiary for the rest of the guarantee period.

Year 1 Year 2 Year 3 Year 4 Year 7Year 5 Year 8Year 6 Year 9 Year 10

No guarantee £

5-year guarantee £

10-year guarantee £

10-year guarantee £

Annuity holder dies

Your beneficiaries continue to receive your income for the rest of the 10-year guarantee period.

You may outlive your guarantee period. Your pension payments continue until you die.

Your beneficiaries continue to receive your income for the rest of the 5-year guarantee period.

Our online annuity planner provides quotes for various guarantee periods. You’ll be able to compare the possible effect on your income of choosing different options. The planner doesn’t compare all options, so please call us to ask about other guarantee periods.

Annuity holder dies




Choosing a joint-life annuity and a guarantee period

With some annuities, you can choose both a joint-life annuity and a guarantee period. If you die within the guarantee period, your nominated beneficiary could receive both payments at the same time. This is called ‘with overlap’. If you prefer, you can choose to make

the payments one after the other. We would pay any remaining guarantee period first, and the joint-life annuity would start at the end of the guarantee period. This is called ‘without overlap’.

The diagram below highlights how this works.

Explaining ‘with’ and ‘without’ overlapIf you choose both a guarantee period and a dependant’s pension, there is the possibility that both options could be activated at the same time. If this happens, you can choose whether they ‘overlap’ and provide your beneficiaries with two incomes or run consecutively.

Year 1 Year 4Year 2 Year 5Year 3 Year 6

Guarantee period chosen for 5 years £

£

£

Guarantee period chosen for 5 years £

Annuity holder diesAnnuity holder dies

Dependant’s deathDependant’s death

Your beneficiaries continue to receive your income for the rest of the guarantee period.

Dependant’s pension with overlap. As well as the guarantee payments from your pension, your dependants start to receive the dependant’s income until their death.

Your beneficiaries continue to receive your income for the rest of the guarantee period.

Your dependants start to receive their annuity income until their death.

No income

With overlap

Without overlap




Value protection

Value protection pays a lump sum to your beneficiaries if you die before receiving the full value of your pension fund. When you take out your annuity, you can choose to protect a percentage of your pension fund, right up to 100%.

Please call us to ask about other amounts of value protection which are not in the options included on our online annuity planner. Our planner doesn’t compare all annuity options.

The lump sum your provider will pay when you die will be the percentage that you’ve protected minus the total gross annuity income you’ve already received.

If you’ve chosen this option and you die before the age of 75, your provider will pay the lump sum to your beneficiary tax-free. If you die after the age of 75, your beneficiary will pay tax on the lump sum at their marginal rate.

Some providers limit value protection so that they only pay it if you die within a certain time period, for example before your 75th birthday.

Explaining value protection

Amount of pensions protected at outset

Your beneficiaries will receive the selected percentage of your pension fund after your tax-free lump sum, minus any income payments made (before tax), if this applies.

Your beneficiaries will receive 100% of any pension left (in other words not already received as income) less any tax, if this applies.

0%

50%

100%

Year 1 Year 4Year 2 Year 3

Annuity income received

Value protection benefit pays a lump sum

Annuity holder dies

Marginal tax rate

This is the tax band that you enter after counting all income, including withdrawals from your pension. Marginal tax rates vary depending on your level of income. The rate doesn’t increase for your entire income, just for each amount above a certain threshold.

Important things to considerOnce you’ve set up your pension annuity, it’s not possible to change the structure. So the choices you make on areas such as death benefits, payment schedule and inflation allowance are fixed. This means that once your cancellation period has passed, you won’t be able to change your mind.

Also, you’ll no longer be able to access the money you used to buy the annuity as it’ll already be providing your regular income. Researching and understanding your options is central to making the right decisions for your retirement.




5. How to use our online annuity planner

We’ve designed our online annuity planner to help you shop around for the best annuity income. Once you’ve entered your personal details, simply compare quotes from the market providers.

To get quotations designed for you, you’ll need to give us some personal information such as:

• your contact details,

• the value of your pension pot (or pots), and

• details of your health and lifestyle.

The health and lifestyle questions let us work out if you could qualify for a higher income. Even minor medical conditions, like raised blood pressure or high cholesterol levels, or if you smoke, could increase your income each year.

Retirement is the one time when your medical and lifestyle situation could really improve your lifetime income. So, let us know everything that you think might help us get you a better rate.

What happens next?Once you’ve given us your details, you’ll receive quotes from all the annuity providers on the open market. Please compare these quotes with the annuity quote from your pension provider. If you want to get an application pack for your chosen quote, you can get this using our online service, or by calling us.

If you’d prefer to get some advice on your decision first, we can put you in touch with an expert who will charge a fee. Remember you can also visit the Personal Finance Society website to find an adviser, at thepfs.org/yourmoney/find-an-adviser

Go to: onlineannuityplanner.com/hubfs/v1/planner to use the annuity planner. Click the start button, then enter your details to get your quotes.








When you receive your application pack, the next step is to read the information carefully. Once you’re happy to go ahead, you’ll need to fill in the application form and return it to us.

We’ll then help to make sure the process is as smooth and straightforward as possible.

You could start receiving your retirement income within four weeks from the day we receive your application.

However, please be aware that the speed with which your annuity is set up depends on how quickly your pension provider transfers the funds to your chosen annuity provider.

Remember, if you want help at any stage, just call us on the number below.

6. What happens when you apply for an annuity?

Your pension provider

transfers funds to your chosen

annuity provider.

Step4

fill in the application form

and return it to us.

Step3

Receive your information

pack and read it carefully.

Step2

Apply for an annuity.

Step1




7. Other ways you can get a retirement income

An annuity can guarantee an income for life, but isn’t the only option you have to provide yourself with an income in retirement. There are other options. However, you may want to consider how long you want your retirement income to last for. We’re generally living longer, so if you’re in your 60s, you could have 30 more years of retirement to look forward to.

Cash – if you have pension savings, you’re now able to take all of the money as a cash lump sum, or as a series of lump sums. But remember, only the first 25% is tax-free.

If you cash in the rest of your pension pot, it would be taxed at your highest marginal rate and could also push you into a higher tax bracket.

You can see the effect of taking up to 25% of your pension savings as a tax-free cash lump sum with our online annuity planner.

With a cash lump sum you get to choose what to do with your money and can spend or invest it accordingly.

The planner will allow you to apply for up to 25% of your pension fund as a tax-free lump sum. If you are entitled to more than 25% as a tax-free lump sum, you will not be able to continue with this application online. If you want to discuss this, please contact us.

Drawdown – this lets you keep your pension invested. You can still take your tax-free cash as a lump sum and then take an income from the remaining funds. This is called ‘drawdown’.

Drawdown gives you a lot of flexibility, but you have the risk of running out of money over time if you take too much cash out initially. Remember your investments could go down as well as up.

Stay invested or defer – if you don’t need to secure an income for your retirement just yet, you can choose to delay taking your pension income, or leave your pension savings invested.

While your pension savings are invested, your provider will continue to charge administration fees. However, it’s important to be aware that because your money stays invested, the value of your pension pot could go down as well as up.

Use a combination of retirement income options – you can create your own bespoke retirement solution by using a combination of the above options. Remember to consider an annuity if you’re planning a combination-style approach to providing your retirement income.

Our online annuity planner does not cover drawdown products, staying invested, deferring your pension income or using a combination of retirement income options. It’s a good idea to get financial advice before considering any of these options as they involve an element of risk.



Still unsure?If you’re not sure how to use your pension savings, why not take advantage of the free guidance available from the Government’s Pension Wise service at pensionwise.gov.uk. Their website offers useful information on how to use your pension savings.

Or, you can speak to your financial adviser. If you don’t have a financial adviser, you can visit the Personal Finance Society website at thepfs.org/yourmoney/find-an-adviser to find one.

Please note that advisers will charge for providing financial advice.

Ready to convert your pension savings into a guaranteed income for retirement?If you’ve decided that a guaranteed income for life is right for you, remember to shop around for the best rate.

By shopping around for an annuity on the open market, and providing details of your health and lifestyle, you could get more income for your retirement.

Our online annuity planner makes shopping around easy and lets you structure your annuity to suit your needs.

• You can provide for your loved ones after your death.

• You can protect your income against inflation.

• You can choose how often your annuity income is paid.

Of course you’re more than welcome to call us and we’ll do it all for you.

For more information or to book a TELEPHONE appointment:

Call: 01737 233413Our UK-based team is available from 9am to 8pm, Monday to Friday (not including bank holidays).

Calls are monitored for training and regulatory purposes, and call charges may apply.

Email: [email protected]

Or visit: hubfinancialsolutions.co.uk

1049921.27 11/2019

HUB Financial Solutions Limited. Registered office: Vale House, Roebuck Close, Bancroft Road, Reigate, Surrey RH2 7RU. Registered in England and Wales Number 05125701. HUB Financial Solutions Limited is authorised and regulated by the Financial Conduct Authority. Part of Just Group plc.

Please contact us if you would like this document in an alternative format.

https://www.pensionwise.gov.uk/en


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Guide to buying an annuity · Lifetime annuities Investment-linked annuities Purchased life...

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