An annuity is a type of insurance policy that provides you with a regular income in exchange for a lump sum. In return for the money you have saved in your pension plan, the company providing the annuity takes on all the investment risk - and you take a guaranteed income for life.
You can shop around You don't have to use the same company you saved into your pension with to provide an annuity income. You can shop around to get a better rate using the Open Market Option.
How your annuity amount is calculated The amount you receive as an annuity will depend on a number of factors, but will largely be based on how long the annuity provider expects you to live – and how long they will have to pay you an income. They may also take into account the size of your pension pot, postcode and gender. Your annuity income is taxable in line with current income tax rates.
There are a variety of different types of annuity available which means it's important to carefully consider the right annuity for you. Read more about types of annuity here.
Just Retirement offers two types of annuity - enhanced and fixed term. Find out more about our enhanced annuities and our fixed term annuities here.
Enhanced annuities Unlike in the case of life insurance, where health problems cost you more in premiums, in the case of enhanced annuities health problems can mean more income in retirement. This is because the companies providing the enhanced annuities make judgements about your life expectancy based on your health and lifestyle. Then they factor that into their calculations.
You may qualify for an enhanced annuity - Just Retirement estimates that 60% of people could qualify. Find out more about enhanced annuities here.
Fixed term annuities You can keep your options open in case your circumstances change later on in retirement by purchasing an annuity on a fixed-term basis. Find out more about fixed term annuities here.
Useful linksTypes of annuity
Read about our Campaign for Better Annuities