As you approach retirement you need to consider your retirement income options and think about your annuity purchase. The first thing to remember about annuity purchase is that you do not have to buy your annuity from the pension company that you saved with. There is an option that was introduced to ensure you get good value from your savings and this is called the open market option.
Retirement is not just about securing your income for this year or even just next year it is about ensuring that you have enough income for the rest of your life. Annuities are often called lifetime annuities simply because they last for your lifetime. As well as considering yourself of course you need to consider those that depend on you for income, such as your spouse or partner. If you were to die early and unexpectedly would they be able to cope financially?
Lifetime annuities can be purchased with many different options and each has a place in retirement planning, however, each also does cost an amount of starting income. As they say there is no such thing as a free lunch, the same is true with annuity purchase. Each option you choose to protect yourself and those that depend on you will lower the amount of income that your pension starts at. Now of course this is why the open market option is essential when you come to purchase your annuity.
The open market option allows you to take your pension fund and the shape of the annuity you wish to purchase to the open market to find an annuity provider that will give you the most income for the accumulated pension fund you have. This is very powerful option and should not be disregarded lightly. The difference between …Continue reading