Annuities – a guaranteed income for life
When you purchase an annuity you exchange some or all of your pension savings for an income for the rest of your life. Under recent pension changes you are no longer required to buy an annuity upon retirement, but they remain an excellent option for people seeking the security of a guaranteed income.
The different types of Annuity:
Conventional annuities :
You get a guaranteed income that stays the same, regardless of any changes to your health or the financial markets.
Your level of income depends on your health and lifestyle choices, such as whether you are a smoker or if you take prescribed medicine.
You are given a guaranteed income that can go up depending on the performance of a selected investment fund.
Your income is guaranteed for a set amount of time, after which you or your beneficiaries will receive a pre-agreed lump sum payment.
Your payments can increase or decrease in line with the performance of your underlying pension investments, usually with a guaranteed minimum level of income.
Most providers will offer you a number of optional features for personalising your annuity. For example, you may be able to protect your income against the effects of inflation or opt for an income to be paid to your partner after you die.
At Scottish Pensions our panel of Independent Financial Advisers can give you the information you need help you reach the right decision for you.
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