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Buy annuities according to your needs

If you decide to buy an annuity, it’s vital that you shop around for the best value, because you can't change it later.

Different types will suit different people’s needs and circumstances.

If you're in a couple, for example, you should think about whether you want a single life annuity just for you or a joint life one. A joint life annuity will pay out to your spouse or partner after your death, but this is usually at a lower rate.

Consider whether you want your annuity to rise annually with inflation or if you'd rather be paid the same amount each year.

The different types of annuities

There are different types of annuities available, including:

Level annuities

A level annuity will pay you the same income each year. They have a higher starting income than an escalating annuity, but they can leave you vulnerable to inflation. Even low levels of inflation can significantly reduce your standard of living.

Escalating annuities

An escalating annuity will rise each year at a fixed rate. It may start off lower than a level annuity, but it will increase at a fixed rate (e.g. 3%) each year.

Inflation-linked annuities

An inflation-linked annuity will rise each year in line with the retail price index. This protects your annuity against inflation, but it will start off at a much lower rate.

You don't have to buy your annuity from your pension provider

Start by checking what your pension provider is offering, because they may offer a higher payment rate than those available elsewhere. But you don't have to go with them, and you can shop around for the best deal - this is known as the open market option.

Contact The Pensions Advisory Service on 0300 123 1047 for free information and guidance.

Age UK also offers an annuity service. It's provided by Premier Retirement Services and can help you shop around for a better rate. Call 0845 600 9269 for a quote.

Further information

For more information: Call Age NI Advice: 0808 808 7575

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