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Frequently Asked Questions


Q. Is taking the ‘Open Market Option’ worthwhile?

A. The Open Market Option allows someone approaching retirement to ‘shop around’ for alternative annuity providers, to ensure they get the best deal for them, rather than simply taking the option offered by their existing pension provider. As a result it is definitely worth taking.

Q. Could I benefit from an ‘Enhanced Annuity’?

A. An enhanced annuity is simply a conventional annuity that provides a higher level of income for people whose state of health or medical history suggests that their life expectancy may be lower. If you could qualify for an Enhanced Annuity, it could certainly be of benefit you.

Q. What sort of improved terms might I be able to obtain, if I qualified for an Enhanced Annuity?

A. That really depends upon your individual circumstances. Here are some examples, let’s assume historic conventional annuity rates for a Male 65, annuity payable monthly advance, with a £100,000 fund. The best rate on the market for a healthy (non-smoking) client might offer £6,392p.a. If the person happened to be a smoker (10 a day), that could increase to £7,363p.a. (+41%).

Q. What charges do I pay when I buy an annuity?

A. There are product charges, but the providers will allow for them in the annuity rate that they offer you. You may have to pay a fee to your Adviser, for arranging an annuity for you.

Q. How much will an Adviser charge me for arranging an Annuity?

A. The usual rate is around 1% of the purchase prices (possibly subject to a minimum amount).

Q. My pension scheme offers me a guaranteed annuity rate, is this worth having?

A. A guaranteed annuity rate will have been written into the terms and conditions of your pension policy at the start and it guarantees you a minimum rate at which you can convert your pension fund into an annuity. The rate. These guaranteed rates are often higher than the rates available on the open market and so it may be a valuable part of your plan and worth considering if the annuity available suits your personal circumstances. However, the guaranteed annuity rate is usually only available if you retire on your selected retirement date and so if you choose to retire earlier or later than that date, you won’t receive the guaranteed rate. Also, the guaranteed annuity rate normally only provides income for a single life, which means that you won’t be able to provide an income for your spouse, civil partner or dependant. So, as always, deciding upon whether or not to take the guaranteed annuity rate totally depends upon your individual circumstances.

Q. How has the 2014 budget changed the options available

A. The 2014 budget has opened up the prospect of additional options becoming available from April 2015 including full withdrawal of pension funds (at marginal rates), an annuity or drawdown and potentially other products created by providers.

If you have a question that isn't answered on the site then you can email us at Please note we cannot answer questions specific to individual circumstances but we will endeavour to include answers to general questions on this page.



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