Deciding how to use your pension funds when you retire can be a daunting task. Having saved for much, if not all, of your working life it’s important to do your research. You'll need to consider all your options to ensure you have the means to enjoy your retirement.

A lifetime annuity is one of several options available to you. You can use your pension savings to secure a guaranteed retirement income for the rest of your life.

Annuities in the news

Annuities have been in the news since pension freedoms began in April 2015. The Pension Schemes Act 2015 allows people aged 55 or over to take some or all of their pension pot as lump sum cash.

Before the reforms, most people had to buy annuities with their pension funds. Despite their benefits, annuities were believed to offer poor value and were thought to be restrictive.

Since then, further developments have been put in place by the FCA. These mean annuity providers have to tell their customers if they could get a better deal by shopping around. Providers must also tell customers how much they could gain from switching provider. But - and this is still the case today – providers aren’t required to tell you exactly where to find higher rates.

Is an annuity right for me?

Pension freedoms have given you more choice and responsibility for your pension savings. There are many different options to consider that are tailored to your needs.

A lifetime annuity may be the right option for you if:

  • You prefer the security of a guaranteed income for as long as you live.
  • You would like to provide for your loved ones by adding certain death benefits to your guaranteed income.
  • You have certain medical conditions or are overweight or smoke and are eligible for an enhanced annuity income.

Buying an annuity is a big decision that cannot be reversed. So, you may be considering seeking advice from an independent financial adviser. But the service of an adviser comes at a cost. Knowing where to find an adviser can often be the first hurdle.

Annuity Ready gives you the ability to shop around in one place. You can compare quotes across the whole of the annuity market to see if you can get a higher income. Yet, we understand that buying an annuity is a very important financial decision to make. So, you may wish to seek further advice.

While we’re a non-advisory service, we’ve put together a guide on what to consider if you’re seeking further guidance and/or a financial adviser.

Claim your right to free guidance first

As part of the pension freedoms changes to the pension market, you have the “right to guidance” at retirement via Pension Wise. This is a government service from MoneyHelper. Pension Wise offer a phone call or an online appointment. The guidance they provide is free and impartial. It's available to anyone aged 50 or over with a defined contribution pension.

A Pension Wise appointment lasts around 45 to 60 minutes. A pension specialist will explain all your pension options. They'll offer insight into how each option is taxed and provide you with next steps. By the end of the session, you should know how to move forward.

Do your research

The MoneyHelper service is a government organisation offering free and impartial money advice.

The website includes:

  • Retirement advice.
  • Guidance on the different types of pension and retirement income.
  • Information on automatic enrolment.

It also hosts a Retirement Adviser Directory You can use this to find a regulated and impartial retirement adviser. You are able to search the directory by how you would like to receive advice (in person, on the phone or online). You can also filter by things like the size of your pension pot and the accreditations and qualifications you would like the adviser to have.

The Society of Later Life Advisers (SOLLA) website also houses a database of advisers that you can search by location or postcode. These advisers have chosen to become independently accredited by SOLLA, a not-for-profit organisation. They have all achieved the Later Life Adviser Accreditation. This accreditation shows advisers have a good understanding of the needs of older clients and can explain complex issues. If you’re seeking advice on an annuity later in life, a SOLLA adviser may be best placed to understand your needs and those of your family.

As highlighted earlier in our guide, seeking the guidance of a financial adviser comes at a cost. You'll need to pay for their service, so it is down to you to consider whether this is right for you.

Annuity advice

If you need a financial adviser:

Check they are regulated

Advisers on The MoneyHelper and The Society of Later Life Adviser websites are FCA authorized. However you find an adviser, it’s important that the individual or organisation you choose is regulated.

The FCA are responsible for regulating the financial sector. They help ensure the market is fair and effective and that consumer products are fair value. If you are unhappy with the advice you receive, or you feel you’ve been mis-sold, you can complain to the Financial Ombudsman Service. They can take appropriate action, for example order advisers to pay compensation. You can use the Financial Services Register to search for the company or person you’re interested in using and check they are regulated by the FCA.

Ask if they are restricted

Financial advisers can be independent or restricted. Independent advisers are not limited to specific products or providers. Restricted advisers are. Check if the adviser you are interested in can offer a whole of market service to get the widest choice.

Look out for qualifications

To become a financial adviser, one must have at least qualification of a Level 4 diploma. Extra qualifications can show an adviser’s commitment to excellence. The Chartered Insurance Institute and The London Institute of Banking and Finance offer an Advanced Diploma. This is widely recognized as the gold standard for Financial Advisers.

Be aware of the fees charged by advisers

Financial advisers can charge a fee for advice. They must provide information on these fees before you commit. It is recommended that you ask for a breakdown of costs so you understand exactly what the adviser will be doing for you. You should also check when you’ll be expected to pay and if there’s a fee for your initial consultation. Many advisers offer a first meeting for free.

Or they may receive commission from the annuity provider. This is usually based on a percentage of the total value of your annuity.

Shop around and compare the whole of market with Annuity Ready

Annuity Ready can help you compare quotes from annuity providers across the whole annuity market. You can get quotes from Aviva, Canada Life, JUST, Legal & General, Scottish Widows and Standard Life.

Simply enter your information once and we’ll search the open market to see if we can find you a higher income than your current pension provider. If we find a quote you’d like to proceed with, you can apply online with most providers or call us and speak to one of our team.

Unlike a financial adviser, we don’t charge you to use our service to compare the whole of market annuity rates. If you choose to buy through us, we will receive commission from the annuity provider. This is a percentage of the policy’s purchase price and is covered within the annuity price shown in your quote.

So, if you’re ready to begin, compare annuity rates now.