APPROACHING
Annuities
An annuity is a financial product that provides you with an income for life in
return for a lump sum.
Annuity rates are set by insurance companies and are
typically expressed as the amount of income per
£10,000 or £100,000 of a lump sum. So, for example,
a 65-year-old man might be quoted an annuity rate
of, say, £700 income for every £10,000 lump sum.
The major drawback of an annuity is that once you
have handed the money over, you can't get it back,
and if you die soon after buying the annuity, then
the income you receive won't be anywhere near the
amount you have paid in. However, there are steps
you can take to protect yourself.
If you belong to an employer's final salary scheme,
your pension is usually paid directly from this so you
don't have to think about getting an annuity. With
some money purchase pension schemes from
employers, the pension trustees may buy an annuity
for you. Find out what your options are from your
scheme manager.
A level or an increasing income from my annuity?
To work this out, you will need to decide whether or
not you want your income to increase each year. You
can buy an annuity that in ܙX\