Annuity

An annuity is a product which provides an income for life. In fact, it guarantees an income for life. When you buy an annuity you are essentially paying for a sum of cash to be paid to you at regular intervals after you retire and until you die.

To buy an annuity you need to have been paying money into a pension fund whilst you have been earning an income during your working years. Upon reaching retirement you will have built up a pension pot and this can be used to buy an annuity.

You can buy your annuity from the company which provided your pension. Or you can go elsewhere, to another provider, where you might find better rates.

How your annuity is paid depends on your circumstances. If you would like your partner to benefit from your annuity after you die you can buy a joint-life annuity, if you want to be the sole beneficiary – you can buy a single-life annuity. You can also buy annuities which pay more as you get older, or which pay set amounts at different stages in your retired life.

	FSA launch inquiry into annuity market The Financial Services Authority has launched an inquiry into the annuity market to investigate whether customers are being encouraged to scour the market for the best deal.
	Annuity rates fall by 11.7% in 12 months New research by MGM shows that the decline in annuity rates is continuing and pension savers are being urged to consider all options to find a better return.
	£130k annuity pot needed to get same income as new state pension The government is set to introduce a new flat rate state pension in 2017 and pensioners would need a £130,000 annuity pot to get the same amount of money, according to research from Prudential.
	Annuity rates drop by 11.5%, biggest annual drop since 1998 A new report by the Prudential shows that annuity rates have fallen by 18 per cent since 2008 and the impact is even worse when inflation is taken into account.
	Nationwide unveils new annuity service Nationwide is going head to head with the UK’s high street banks by launching a new annuity service, offering plans from six major providers.