The good news is that by law your existing pension provider has to offer you the chance to take your pension fund and invite others to bid on how much they will provide you per month. This is more commonly known as the open market option (OMO). The simplest way to do this is to speak to an independent financial advisor. Why, because they have access to all the annuity quote systems and can also, through asking the right questions, find out more about you which will squeeze more out of the annuity companies.

Everyone’s situation is different and it important that you know what your options are before locking into an annuity rate for life. Your health can have a big part to play in what rate you’ll be offered. You need to disclose all your past medical history and current medication as you could qualify for enhanced rates.

Don’t ever settle for the first offer your existing company provides you. It’s a default quote based on someone who is your age with your pension fund size. They haven’t a clue what your state of health or future income requirements are, but if you just sign the form and send it back they won’t ask any questions. If they can get away with offering you a lower rate that they deserve they will. It’s believed around 60% of retirees do this and miss out on a much higher income.

One main point to remember though is that it’s not just about the best rates. You might see tables in Sunday papers based on a male who is 65 with a £100,000 pension pot. The company who is at the top, is at the top for that scenario, and that scenario alone. It is not a good indication of if that company is right for you. The only way your going to find out who has the best annuity rates for your situation is to ask all the companies to do a like for like quote after they have all your information. Use your open market option and fill in the quote for to the right and we’ll get some free quotes for you.

• You can take up to 25% as a tax free lump sum

• Lifetime annuities are exactly that – they pay you for the rest of your life, no matter how long you live

• they may not be guaranteed for more than 10 years from the date they begin

• they are taxed under PAYE so the same as if you were earning the income. (it often surprises people that they are taxed on their pension income)

• once you decide all your options and start your annuity payments, you can’t change your mind further down the line (if you feel uncomfortable with this see temporary annuities)

• you can chose to have you spouse/partner paid out if you die within guaranteed periods

• if you are in ill health or have lifestyle habits such as smoking you may qualify for enhanced rates. This provides a higher initial income

• the current difference between rates offered to males and females will be abolished at the end of 2012 (blame European parliament! )

• annuity rates have been in slow decline over the past decade and don’t show signs of ever getting better

• if you have more than £20,000 guaranteed pension income you can qualify for flexible drawdown. This allows you to take as much as you wish from your remaining pension pot, whenever you like

• when you die the remaining part of your fund will go to the annuity company (unless you have arranged for it to be paid out for a guaranteed period usually 5 or 10 years). The best way to avoid this is to stay healthy and live longer so the insurance company are out of pocket!

• You can decide when you wish to receive payments from your scheme. Monthly, quarterly, half yearly or at least annually. (the less frequently you are paid out the better rates you’ll get. They are basically holding your money for longer so you’ll get interest on it)

• the maximum allowable pension fund size came down from £1.8m to £1.5m this year

• there are three main types of annuity. Fixed rate – which means your income stays level or increases by a certain percentage each year. Index-linked – which means your income will change with an index such as RPI ( the cost of living/general measure of inflation) and Investment Linked – these provide returns linked to underlying investment performance of a with profits or unit linked fund (these used to be popular but with the stock market volatility of the last decade now account for less than 5% of total annuities)

• you no longer have to buy an annuity by the age of 75 and can take your income from age 55

• by law you have to be allowed to shop around for the best annuity rates by using the open market option

Rather than handing your pension pot over to an annuity company at retirement and locking into a rate which you will be stuck with for the rest of your life, you can delay the purchase by using drawdown.

What drawdown simply does is allow you to retain control over your fund. You can take income from it (within limits) and keep the remaining amount invested until you decide annuity rates are more favourable. Drawdown also has higher death benefits. If you were to die after you’d purchased an annuity, the insurance company would keep the remaining part of your fund which hadn’t been paid out. With drawdown this is returned to your estate with a flat rate tax charge of 55%.

It still allows you to take upto 25% of your total fund at a tax free lump sum or leave it invested to gain greater potential growth.

Drawdown isn’t right for everyone however and you should seek independent financial advice to discuss all your options before making any decisions. If you’d like to find out more fill in our free quote form and a retirement specialist will be happy to discuss your situation further and answer any questions.

As the trend to depress annuity rates continues many retirees are looking for an alternative option for their retirement income. Locking into an annuity rate at retirement for life has become increasingly unattractive over the last decade as increased life expectancy together with falling gilt rates and rounds of QE have left annuity rates at historic lows. The traditional annuity will still suit many who would rather lock into a rate and know what their projected income will look like for the rest of their life, however for those looking to maximise their income, there are alternatives.

The Temporary Annuity has grown in popularity of the last few years. They offer a guaranteed income over a period, typically 5 or 10 years. The advantage being, that you health and lifestyle may change during this period allowing you to reassess you position at the end of the period. If at age 65 you are fit and healthy and buy an traditional annuity, and then subsequently 2 years down the line develop health problems, you can’t take advantage of annuity enhancements. These look at your state of health at the time you take an annuity to judge your life expectancy. You may therefore be stuck on an income for your remaining years, which by the time you die, totals substantially less than the pension pot you handed over to the annuity company in the first place. A temporary annuity which is guaranteed for 5 years, will allow you to have an income during that period, and then if your state of health has changed by the time it matures, qualify for enhanced annuity rates and a higher income for future years.

Temporary annuities also of a guaranteed sum to be returned. They offers the chance to provide an income during the ‘temporary’ period and therefore also provide some growth. The attraction of these annuity alternative have seen year on year increases at around 30% over the last 2 years.

From our own research at RetireRight those taking out temporary annuities have expressed taking a temporary view in the hope of either increased annuity rates in the future, or to reassess their position, particularly health related, in future years.

Temporary annuities are not right for everyone and you should always speak to an independent financial advisor to give you the full picture of all your options. Fill out the form on the right and discuss your options for free with a retirement specialist.

Its not just splitting pots when it comes to the annuity, you can also do it between a temporary annuity and a conventional annuity. Thereby reducing any risk you may have had with investing all in either an annuity or a temporary annuity.

Always look at all your options when deciding on what the best option in retirement is for yourself and seek independent Specialist Retirement Advice.

Always disclose all medical details when applying for an annuity and be as thorough as possible, this is very important as a little thing can increase your rate considerably. For example, a stroke victim who was pressed about their rehabilitation stated that they now had trouble walking and breathlessness when performing everyday tasks. This actually increased income by 10% in total for the joint income annuity.

When being thorough with all of this its worth referring to the common quotation form that is used by all of the enhanced annuity providers, you will find this answers all the questions that the annuity companies are likely to ask. Although it has been known that some providers will give better rates with a more in depth knowledge of diabetes and strokes so in these cases always seek independent advice from a retirement specialist.

Annuity rates and your subsequent income are based on a number of factors one of which is how long you are going to live for. As rates are going down then it would suggest that insurance companies feel we are living longer. It may seem a morbid subject but you are essentially calculating how long you are going to live for. The longer you leave buying an annuity then potentially the more you will get but this is not always the case. Your investments are not always going to go up and you may well find that rates actually decrease in the future. This goes back to the cost of delay, delaying buying an annuity is risky as the longer you will leave it then also you are delaying any income you might have had whilst you wait.

Always consult a retirement specialist when deciding on what to do with your retirement.

It’s worth getting a quote on variants of options your interested in such as a 5 or 10 year guarantee. If your unsure of what options are available to choose speak you a retirement specialist.

As a rule of thumb, single life annuity with nil guarantee will get you the best annuity rates. If you want a safety net you should look for a guarantee or a joint life benefit. Although its worth noting that should your partner/spouse suffer from any illnesses or qualify as enhanced, you may find that you are able to get a better rate than a single life with nil guarantee.

Recent trends have suggested that the best time to buy an annuity is the moment you decide its the right choice for you above an annuity alternative. Simply because the cost of delay can eat in to your overall income, in a nutshell, waiting a year means a years less income, which can often take around 15 years or more to make up. The downside to this is you may only qualify for standard rates. You may lock into a lower annual income than if you were to wait a few years, at which point you may qualify for enhanced rates, which will provide a higher annual income for life.

In the current climate, with rates being slowly depressed down, it would be sensible to suggest that annuity rates will continue to decrease as our life expectancy gets longer. One of the major calculators to annuity rates is mortality rate, we are living longer therefore the annuity companies are paying out for longer, resulting in lower rates.

You must also take into account how your current pension fund is actually doing. Does the performance of the fund suggest it may be better left where it is, to achieve more potential growth. Can you afford to delay taking you pension income or do you need is straight away. Everybody’s circumstances are different, its therefore essential to take specialist retirement advice when dealing with your retirement.

Lifestyle factors such as these will potentially increase the amount of money you are able to get for your annuity. Your medical history may shorten your life expectancy and as a result, the length of time an annuity company has to pay you for. It is only fair then, that this is taken into account at the outset of you arranging your level of income.  It’s important when applying that you mention any medication you take and why, also whether you have smoked and what job you do. All these affect your rates, even your postcode! Always ask your retirement specialist if you could qualify for enhanced rates.