With a Lifetime Annuity, you use your pension pot to buy a retirement income for the rest of your life.With a fixed-term annuity you use your pension pot to buy a retirement income for a set number of years.
A fixed-term annuity provides a regular retirement income for an agreed number of years (say 3 or 20 years) and a lump sum at the end of the period. The Lump Sum will then be used to buy another Annuity or to draw down income from it. You would also choose whether the Fixed-Term Annuity was a single or joint life basis, whether payments to you were fixed or increasing and whether the annuity deliver a guaranteed or an investment-linked income.
Risks and Benefits of a fixed-term Annuity
The main risks are:
- the rules for how you can take your pension are changing and taking out any Annuity may result in you being locked in
- Investment risk. Lower than expected investment performance could result in your maturity amount not being enough to provide you with the retirement income you need. Annuity rates could fall.
The main benefits are
- It allows you to keep your options open. You are not locked in for a lifetime
- The potential for Investment gain. Annuity rates could rise. Your maturity amount could increase to provide more retirement income.
To make sure you make the right choice, we strongly advise that you seek professional advice from a fully qualified and regulated Independent Financial Advisor. To arrange for a no obligations, initial free telephone consultation click here.