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Annuity Quotes Can Be Very Easily Found From Comparison Websites

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Although some people have the benefit of final salary pension schemes guaranteed by their employer, most people who wish to ensure they have more retirement income than the state pension provides, save using either a private pension plan (PPP), or an occupational defined contribution pension scheme. The funds put into the scheme are invested by the pension fund manager. For younger people there can a major proportion of the fund invested in equities, as these provide the best opportunities for long term growth, but as the person approaches retirement age the fund manager will change the balance of the fund to emphasize cash and government bonds, protecting the growth that has already been achieved. On retirement, part of the pension fund may be taken a lump sum, and the remainder is either used as an unsecured pension (USP), or an annuity may be purchased to provide a guaranteed life-time income. Annuity quotes may be very easily found online, as there are now several comparison websites in operation.

When a person is approaching retirement age they must make some choices about what to do with the contents of their pension fund. According to current regulations the pension fund cannot be touched until age 55, and if the fund owner survives to age 75, purchase of an annuity becomes compulsory.

A lump sum can be taken from the fund after age 55. This can be up to 25 per cent of the fund’s value, and no tax is charged on this sum. In the case of small pension funds the government allows 100% to be withdrawn, under the so-called triviality rule.

The remainder of the fund can either be used to purchase an annuity, or it can be left in the fund where it can provide an unsecured pension (USP). Note that USPs are sometimes called income drawdown.

Income drawdown, or unsecured pension, is not suitable for all retirees. One benefit of this option is that the fund will remain invested, and it may continue to grow in value. Additionally if the retiree dies the fund will form part of the estate, and can be inherited by the beneficiaries of the will.

The danger with income drawdown is that if the retiree has a long life after retirement, then the fund will become exhausted. Actuaries can calculate the point in a person’s life at which income drawdown becomes a worse option than annuity purchase, and it is always recommended that those using drawdown employ an independent financial advisor to conduct regular reviews.

Annuities are an insurance instrument, purchased from a life assurance company. The life company takes the pension savings, and guarantees the retiree a life-time income. The life company is, in effect, assuming the risk that the person may live for a long time, in which case the company would lose money on that particular annuity sale. This is however simply the trading of individual risk for collective risk, which is inherent in all insurance business.

Annuities can be bought from any life assurance company, there is never any obligation to buy from the pension fund manager, although they will normally make an annuity offer. Annuity quotes from many companies can be very easily found, as there are now several comparison websites in operation.

Annuity Rates can find you the best annuity quotes from the entire annuity market. We can also find you the best over 50 life insurance.

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People May Compare Retirement Incomes With Whole Of Market Annuity Quotes

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Many people save towards their retirement with personal and occupational pension schemes. Most of the schemes can be categorized as money purchase schemes. This means that when the person retires the money invested in the pension fund is converted to cash and used to purchase an annuity. There are many different options when purchasing one of these products, such as level and escalating annuities, and single life or joint life annuities. This article explains some of those options, and shows how an annuity quotes can be used to let a person estimate the amount of retirement income they will get.

Most pension schemes other than final salary schemes, and other defined benefit schemes, can be categorized as money purchase schemes. A person, and possibly also their employer, make contributions into a pension fund, which is invested in the financial markets with the intention of building up a suitably large pension pot by the date of the person’s retirement.

On retirement the pension pot is then used to purchase an annuity. These are a type of insurance, which are sold by life insurance (or life assurance) companies. They provide a guaranteed lifetime income, regardless of how long the pensioner lives for. This is desirable as it protects pensioners from the danger of exhausting their pension pot.

Those who buy an annuity to provide a retirement income will normally have one of the following types of pension: a personal pension, a stakeholder pension, an Additional Voluntary Contribution (AVC) or Freestanding Additional Voluntary Contribution (FSAVC) scheme, or a retirement annuity contract. Those who are members of an occupational defined contribution scheme may find that the scheme managers purchase the annuity for them, but they are entitled to choose the type of product which they want.

There are many different types of product, allowing the retired person to choose something suitable for their needs. The most basic choice is between a single life or a joint life policy . Joint life annuities will provide a pension for a person’s spouse or partner. These are therefore most normally chosen by couples, unless the spouse or partner already has an independent source of retirement income.

Another choice which can be made is between a level, and an escalating annuity. Level annuities will pay out the same income throughout the rest of a person’s life, while escalating annuities will constantly increase. The increase may be a fixed rate (e. G. 3%), or it may be linked to the Retail Price Index (RPI).

A third option involves a guarantee period. With a standard policy, if the pensioner was to die very soon after buying the annuity, the payments would simply stop. This would mean that the pensioner’s estate did not really benefit from that person’s lifetime of saving. With a guaranteed annuity, the life assurance company will pay the annuity for some predetermined period (usually five or 10 years) even if the pensioner dies.

All these options affect the amount of retirement income. For example a joint life policy will pay out less than a single life policy, because the life company have the additional commitment of funding the spouse’s pension. An annuity quotes is a simple online tool, which allows a person who is approaching retirement to estimate the effect of different options on their retirement income.

When approaching retirement it is vital to shop around using the open market option and to make sure that you use a broker that advises from the whole of market for annuity quotes.

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