An annuity is generally what people understand to be a pension in the traditional sense of the word. That is, purchasing an annuity provides a secure income for the remainder of the annuitant’s life. This grants security and peace of mind in retirement as all future income payments are known from the outset. Once an annuity is purchased, however, the terms are fixed and cannot be changed at a later date. It is crucial to therefore get things right at the first attempt.
Moreover, when retirement comes around the pension provider will write out with their own annuity terms. At this point, pension investors have an opportunity to shop around and secure better terms from another provider. This is called an Open Market Option and simply identifying the best provider can uplift pension income by 50%. In the event that the annuitant has ill-health or even minor ailments, better annuity terms may be achieved as rates are set based upon life expectancy. So cold, hard medical statistics can be used to leverage a higher income in retirement in the right situation.
Annuity add-ons and their use in financial planning can be confusing. This is certainly a financial decision where good advice can really add value. As independent financial advisers, the advanced research software that we employ will make sure that you get the best out of an annuity.