Active Wealth Limited

Buying a Lifetime Annuity

A lifetime annuity converts your pension fund into pension income, which you’ll be paid for the rest of your life.

When you’re approaching retirement your pension provider will write to you with details about your pension fund. They’ll tell you about using your pension fund to buy a lifetime annuity.

It’s important information, so read it carefully and ask your pension provider or financial adviser about anything that isn’t clear.

It’s time to choose

There are several important decisions you have to make now, including:

• whether to delay buying an annuity or taking any pension income for now;
• where to buy it from to get the best deal – you don’t have to buy it from your current pension provider;
• what sort of annuity to buy – one just for you or one to include a pension for your spouse or partner when you die;
• whether to take a tax-free lump sum from your pension fund first; and/or
• whether to go for one of the other pension income options.

For more information, please see Choosing a Lifetime Annuity.

Commutation

If the total of all your pension funds does not exceed a minimum amount (£16,500 in 2008/09), you can take it all as a cash lump sum instead of an income. You must be at least 60 but under 75 to do this.

Retirement

Retirement means the time from when you start to take the benefits from your pension. You can take your pension benefits from age 50 (going up to 55 by 2010). You don’t have to stop working to do this.

The precise timing may vary between pension schemes, so check with your pension plan provider.