Types of Annuities

There are several different types of annuity and each will be suitable for different people. Here’s an overview of them:

Immediate Annuity

This is, perhaps, the simplest type of annuity. The annuitant pays their lump sum to the provider and their monthly income starts immediately. It ends at the time of their death.

Guaranteed Annuity

This works much like the Immediate Annuity, except that there’s a ‘guaranteed period.’ The guaranteed period is an agreed length of time from the start date of the income payments – usually 5 or 10 years. If the annuitant dies within that guaranteed period, the monthly payments will be made to his or beneficiaries until that time period is up.

Compulsory Purchase Annuities

This is the most common type of annuity and is the one that is bought with your pension fund. They’re often referred to as a the Open Market Option annuity because these annuities give you the option of moving your pension fund from your current provider to an annuities provider who will offer more favourable rates.

Temporary Annuity

With these, the annuitant pays a lump sum to the provider, as with any annuity, and then receives an income for a temporary period, for example 5 years. The payments stop at the end of the agreed period or at the death of the annuitant, if this is earlier.

Deferred Annuities

Here, you make a lump sum payment or regular payments to an Annuities Provider, but the payments do not start immediately. They start at an agreed date. These work best for those who want to pay more money into their annuity over a longer period of time and are often used by investors or those preparing well in advance for retirement.

Level Annuity

With a Level Annuity, the payment remains steady at all times and does not move in line with inflation. While this offers an element of consistency and certainty, insofar as you will know exactly how much you will receive each month, some people prefer their income to be calculated in relation to inflation to account for increased living costs.

Escalating Annuity (or Increasing Annuity)

This is an annuity whereby the recipient’s monthly payment increases each year by an agreed proportion.

Types of Annuities Links

• Single or Joint Annuity?

• Get Annuity Quotes

  Fund Size (£)*

  Title* --select--MrMrsMissMsDr

  First Name*

  Surname*

  Postcode*

  Date of Birth*

  Telephone*

  Email*

  Do you smoke?*  Yes No

  Do you take medication?*  Yes No

  

• What Happens Next?

  One of our expert advisers will review your information and get in touch. We‘ll then search the entire market to return the best annuity rates for you, according to your own personal circumstances.

  04-FEB 2012

• Who are we?

  Retirement Solutions Limited is a Specialist Independent Financial Adviser. We aim to be a one-stop shop for all retirement income solutions.

• Accreditations

  Annuity Rates is a trading style of Retirement Solutions Limited, who is authorised and regulated by the Financial Services Authority.

  Registered Office: Centrix House, Crow Lane East, Newton Le Willows, WA12 9UY

  Tel: 01925 321 421
  Fax: 0844 358 0271

  Registered in England and Wales No: 06006741