About Annuities

At retirement you have to decide how you are going to use your pension fund to provide you with an income; many choose to buy an annuity.

You have the option to take up to 25% of your pension as a tax-free lump sum with the remainder of your pension then used to buy an annuity, providing you with a reliable income for either a set period of time, or for life. The choices you make are important as once annuity arrangements are in place, they can't be changed. This is why shopping around to get the highest income and taking advantage of any enhanced or impaired annuity rates available is important.

TQ Invest can do this shopping around for you, and enquire about enhanced or impaired rates as well as helping with all the paperwork.

Lifetime annuities - Ideal if you are looking to secure your retirement income for life.

Fixed-term annuities - Provide flexibility on how you draw your income later in your retirement.

Enhanced / impaired annuities - Ideal if you have medical conditions or a lifestyle that may affect your health, eg. smoking.

Annuities provide you with a way of converting your pension into a regular income throughout your retirement.

If annuities didn’t exist, there would be a danger that you may spend your entire pension in just a few years, leaving you without an income in retirement and potentially relying on the State.

Conversely, you may be ultra cautious, and in the uncertainty of not knowing how long you are going to live, leave the majority of your pension unspent and miss the opportunity to enjoy a relatively comfortable lifestyle in retirement.

If you suffer from poor health or you have an unhealthy lifestyle, such as being overweight, a heavy smoker or drinker, you may qualify for an enhanced annuity. And If you have a qualifying medical condition, such as cancer or a history of heart attacks, you may be considered for an impaired annuity.

Qualifying for an impaired or enhanced annuity could increase your retirement income by 30%, adding hundreds, or even thousands to your annual earnings.

The reason for such a large increase is down to life expectancy. It is assumed that having a medical condition or an unhealthy lifestyle will mean you won't live as long as a 'healthy' person, and so your annuity will not have to pay out for as long.

It is unlikely you will be automatically offered an enhanced rate from the company you have saved your pension with. Call the team at TQ Invest on 0800 294 7221 to see if you qualify for an enhanced or impaired annuity, or find out more from our frequently asked questions.

A single life annuity pays you a higher income in retirement but stops on your death.

If you have a partner to consider, who will be reliant on your pension income too, then you may want to consider a joint life option. Although this will pay a lower income, if you die first it will continue to pay your partner at the percentage you have selected. Joint life annuities are commonly used when one partner has little or no pension of their own.