As the financial world reeled in the wake of the referendum result, the impact of Brexit was felt across the UK pension market, as companies immediately announced cuts to the annuity rates they will provide to people on retirement.
With the risk that rates may fall further, if you're about to retire in the not too distant future, you may be asking yourself this: What can I do to secure the best possible pension income?
Recent rate cuts will mean that purchasing an annuity to fund your retirement could generate a lower level of income than it previously did. Under pension freedoms, there is no requirement to buy an annuity. For some people, the flexibility of drawing regular sums from their pension instead appeals. This means they can leave their pension invested, and perhaps put off buying an annuity until a time they hope rates will have improved.
For others, however, annuities retain their attractions. A pension annuity is still the only way to turn your pension savings into a regular, guaranteed income for life - for you and, if required, a partner. The income you receive is confirmed upfront, and will continue to be paid to you, regardless of how long you live. This often means that the longer you live, the more value you are likely to get from an annuity. Many people choose an annuity for the peace of mind that comes with knowing that your pension income won't run out before you pass away.
However, accepting the annuity rate offered by your existing provider could mean that you miss out on extra income from your annuity – so it's vitally important to shop around.
Comparing the whole of the annuity market through regulated, independent and impartial companies, such as Age Partnership, could provide you with access to higher annuity rates and therefore increased income for life.
Health and lifestyle factors, which often aren't considered in the quotes sent by existing providers, mean that you could qualify for up to 40% more pension income1 through an enhanced annuity.
Though not an exhaustive list by any means, some examples of conditions or factors that may qualify you for an enhanced annuity are:
• High blood pressure
• Heart disease
• Kidney failure
It's worth noting that once you've obtained an annuity quote from a retirement company, the terms are usually guaranteed a period afterwards. So requesting your quote now could give you peace of mind in this turbulent post-referendum market. And if you've recently got your quote or purchased an annuity, you won't be affected.
Talking to an experienced specialist or financial advisor is very important before you make your decision. Companies like Age Partnership, who are impartial, can help take the stress and worry out of the process, too.
Should you be interested in an annuity, they can provide all the information you need to proceed. Alternatively, should you wish to retain flexibility around changing annuity rates they also offer further retirement solutions, including Pension Drawdown and Fixed-Term Annuity.
To find out more, visit www.agepartnership.co.uk or call Freephone 0800 464 0722.
1 Research by the Money Advice Service shows that the usual increase based on health and lifestyle factors is up to 40%.