If you are approaching retirement you will no doubt be thinking about what do with regards to your income once you stop working. Most people who have been paying into a private pension scheme opt to buy an annuity, unless they are fortunate to have been paying into a final salary pension. One thing you may look at when shopping for an annuity is an annuity rates table. These show snapshot rates from the various providers, with a variety of rates for different retirement ages, as well as standard and enhanced rates. You may also see smokers rates on an annuity rates table.
The table is designed to act as an illustrative guide to current annuity rates and should not be used as an absolute method of deciding which annuity provider to use. The reason for this is that a full annuity quote can only be offered by gathering detailed information about an individual, such as any medical conditions they may have (past or present). For example a company which is not top of the rates table may indeed have the best rate for your particular circumstances. Annuities are not like other forms of insurance where you can easily compare quotes and be sure that the one that appears to be cheapest in a comparison table is the best deal around. The FSA website offers annuity tables but again this is only aimed to act as a guide and to encourage retirees to shop around for the best deal. Comparing providers is essential because it can increase your annuity offer by up to 40% or more.
Annuity Rates Tables - Glossary
Single life Annuity – Your annual income is paid only to you and will stop when you pass away
Joint life 50% – This means that when you pass away 50% or more of your income can be paid to your partner or spouse. The quote is based on your partner being three years younger than you
Level Annuity – The most popular annuity in the UK – payments are fixed at the same amount for life
RPI – Your annual income will increase or decrease in line with the Retail Prices Index
Guarantee – When you pass away your annuity income will still be paid for a guaranteed period, usually five years
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