Frequently asked questions

Annuities, health and enhanced rates

Can I get a better annuity rate if I suffer from an illness?
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Some illnesses do mean you qualify for an enhanced annuity rate. These are called “enhanced” and "impaired" annuities. Providers will often relate any illness to your life expectancy and if the illness may cause a reduction in your life expectancy when compared to the average, some specialist providers may offer more income than is available from a standard annuity.


Can I get a better annuity rate if I'm a smoker?
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If you smoke cigarettes, cigars or tobacco regularly, you need to disclose this when requesting a quotation as this may qualify you for an 'enhanced' annuity rate. Because your life expectancy may be reduced when compared to the average, some specialist providers may offer more income than is available from a standard annuity.


I have a history of health conditions - can I still get an annuity?
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Yes – in fact by having certain medical conditions you may qualify for an enhanced or impaired annuity that pays higher rates to people who may be generally unhealthy or have a lower than average life expectancy.


What if I am not sure of my medical history?
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If you aren’t sure of the option to choose or can’t remember all of your medical history then make sure you explain this to one of our annuity coordinators - they can help ensure you submit the right information.


Why do you need my medical information?
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Annuity providers use your medical information (and any dependant's medical information if relevant) as part of their quoting process. This is due to them estimating how many years they believe they will be paying out for. If you have a shorter life expectancy, they may be able to offer you an increased level of income. All medical information may be cross-referenced with your medical records when the annuity is set up so it’s important to be accurate when completing this information.  

Arranging an annuity

How long does it take to arrange an annuity?
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Once you have decided on your annuity and the options you want included, we can help you arrange it.
 
A delay could be caused by how quickly your pension provider can transfer your pension to the annuity provider. We estimate a processing time of 3-4 weeks, but this could be significantly longer depending on what systems the provider uses.
 
We use our expertise to ensure this is done as quickly as possible and that you are kept regularly updated.


How safe is my annuity?
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Conventional annuities or enhanced/impaired annuities are very safe financial products.
 
The providers of annuities have to keep large amounts of capital aside to ensure they are able to meet their obligations to the industry regulator, the Financial Conduct Authority.
 
If the worst were to happen and an annuity provider was to fail then the Financial Services Compensation Scheme will guarantee to protect 100% of the value of your annuity - though this may change. You can check the latest position at www.fscs.org.uk

Costs of our service

How much does the service cost?
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Full details of our terms of business are provided in the 'Key Facts of our Services' document, which you should read.
 
We do not charge an upfront fee for our services or for the provision of information. However, we will be paid commission by the provider you select for your annuity.
 
Any commission payable to us is illustrated in the quotations you receive.

General annuity questions

Can an annuity be altered at a later date?
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Once you have bought a conventional annuity you can’t transfer it to another annuity, change the options you selected at outset or change to another provider.
 
It is therefore important to consider your options carefully before buying an annuity. Our section 'Securing a Guaranteed Income' and the Online Annuity Planner will help you to understand your options.  


Do I have to purchase an annuity through my existing pension provider
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No - you don’t. You can often obtain an improved income in retirement if you shop around.
 
This process is known as taking an 'Open Market Option'. Shopping around will show you the variations in annuity rates and you can use our Online Annuity Planner to obtain quotes from a variety of providers. You can then compare this with the annuity rate offered by your existing pension provider to see whether it compares favourably.


Do I have to use my entire pension fund to buy an annuity?
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No - you are usually able to take up to 25% of your pension fund as a tax-free cash lump sum if you want (though you will have to pay tax on the remainder of your pension).


Is there a difference between annuity providers?
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Deciding which provider to select is often driven by the income you receive and the features of the products offered.

Some providers only offer certain benefits, while others don’t so it’s important to use our Online Annuity Planner to compare on a like for like basis.


What is the Lifetime Allowance?
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The Lifetime Allowance is the maximum value of pension savings an individual is allowed to draw without incurring tax penalties. The amount is set by the government and is £1m for the 2017/2018 tax year.

Whenever you draw benefits from a pension scheme, these are tested against the lifetime allowance and your pension provider will tell you the percentage of the lifetime allowance used.


What is the open market option?
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The ability for you to shop around and buy an annuity from any annuity provider, not just the company that provides your pension. This option enables you to search for the best annuity rate for you.

By shopping around, rather than staying with your pension provider, you could find you receive considerably more income in retirement. Use our Online Annuity Planner to compare a variety of leading annuity providers.


Will my spouse/partner get any money from my annuity when I die?
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When you die your annuity simply stops and your partner will not receive any money when you die, unless you have chosen options within your annuity that specifically provide for them.  

There are several ways to do this including a joint annuity, guarantee period and value protection.  

All of these options are described in our securing a guaranteed income section.