Moneytree Wealth Management
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What’s an annuity purchase?

It’s a product you can buy with your pension pot to give you an income for the rest of your life or for a fixed-term at retirement. You can take up to 25% of your pension as a tax-free lump sum, and then buy an annuity with what you’ve got left or use the whole lot without taking the lump sum. That’s up to you.

There are many different options available with annuities – here are some examples.

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.

Basic income annuities

Give you a set amount every month until you die. This amount is guaranteed to last you for the whole of your retirement period, so the bigger your pot is and the later you retire, the more you’ll get.

Fixed-term annuities

Pay you an income for a set term. The rest of your pension pot is re-invested until the annuity term comes to an end, at which point you can decide what to do with it again.

Investment-linked annuities

Provide you with a variable income for life. How much this is depends on how the stock market performs. There will be a minimum level you’ll be guaranteed to be paid, which you might be able to decide on yourself.

Income from annuities is taxed in the same way as income you’d get from employment.

Which is the best kind of annuity for me?

This depends on whether you like knowing exactly how much you’ll get every month or don’t mind taking a bit of a risk and potentially having more in your pocket.

They all offer different options to fit your circumstances, including the choice of joint or single policies and guaranteed pay-out periods.

To talk to us about an annuity purchase, please give us your details on form on the right-hand side of this page. You can give us a call if you prefer on 01244 47010  or send us an email to: 

Tax treatment varies according to individual circumstances and is subject to change.

Tom Lenton

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