Here at Derngate Wealth, Peterborough’s leading financial advisors, we want you to feel happy and fulfilled with whatever annuity you choose. Our team want you to have the best deal and the most suitable provider for your own personal needs.

It is crucial to get it right first time when buying an annuity – there is no turning back after you’ve made the move.

Depending on which provider you go to, you can increase your income by up to 20% just by having a little shop around.

If you’re feeling under the weather, you may actually be eligible for an annuity called an ‘enhanced’ or ‘impaired’ annuity. These products may pay better rates as the annuity providers expect to pay the annuity over a shorter period.

Open market option

With the majority of pensions, you automatically have what’s called an ‘open-market option’ (OMO).

Basically, it means you don’t have to take the pension offered to you by your pension provider, but have the right to take your built-up fund to another provider to get a higher annuity rate.

annuities peterborough

Note that pension providers are obliged to remind you of your right to take the OMO, and the Financial Conduct Authority (FCA) supplies helpful information on annuities and other pension issues.

If you hold a retirement annuity contract (RAC), which is an older form of personal pension available before 1988, then unfortunately you may not have access to the OMO, but it all depends on your contract and terms. You are bound to the different tax rules if you do transfer to a personal or stakeholder scheme.

Don’t hesitate if you belong to a money purchase occupational or an in-house AVC scheme, and want to know how to get the best rates, even though the scheme trustees may be responsible for buying the annuity.

Using the OMO is usually a pretty good idea. However, some providers offer a guaranteed annuity rate on pension funds built up with them, which means this could be a far higher rate than any currently available, therefore checking your positioning before taking your fund to a new provider is a necessity.

Also be aware for any charges if you exercise the OMO. In most cases, there shouldn’t be any if you retire at the retirement date you had initially planned. However some providers make charges if you retire any later or earlier so be careful.

Annuity rate

Annuity rates are usually affected by:

  • Your age – The older you are when you buy the annuity, the higher the income you will get, because the insurer doesn’t expect to be paying it for as many years.
  • The provider you choose – in the case of a pension annuity, this doesn’t have to be the company you built up your pension fund with.
  • Your gender – Because of the estimated longer life span of women, they are offered lower annuity rates than men.
  • Life expectancy – Annuity rates tend to fall as life expectancy increases.
  • Time of purchase – Annuity rates depend on interest rates generally, as well as on government gilt prices.
  • Your wellness – those in poorer health can get a higher rate with an enhanced life annuity because it is a possibility they won’t live as long.
  • Any extras you choose with your annuity and which type of annuity you go for.


Annuities and financial advice

Receive professional advice to help you decide what type of annuity will work best for you. If you’re thinking about an enhanced annuity, investment-linked annuity, income drawdown or phased retirement, then advice is essential.

Always make sure you only see professional financial advisers (IFAs) who can look at the whole market for you. Most of the time, tied advisers will only look at a selection of providers (sometimes just one) and there is no guarantee that their selection will include those offering the best rates. You can only be sure you have the best rate by comparing a large section of the market.

Derngate Wealth offer financial advice in Peterborough and surrounding areas. Call now to speak to one of our advisors on 01733 561 615


No comments yet.

Leave a Reply