As you approach retirement you are faced with the dilemma of converting your pension pot into an annuity and understanding how taking some of the many options available (Payment frequency, guarantees, spouse’s pension and indexation of payments) affect the income of the annuity.
An annuity calculator can help make this task easier by allowing you very quickly to recalculate the amount of income received when you add or take away any of the options.
An example of these options affect the annuity income is shown below:
A 65 year old male with a 65 year old spouse and a pension fund of £100,000, taking a single life level annuity monthly in advance with no guarantee would get a gross income of £6,997 per annum.
If the same 65 year old male decided that he wanted his level annuity to continue at 50% of his annuity income to his spouse after his death and add a 5 year guarantee, this would reduce the gross income to £6,395 per annum
If the same 65 year old now decided it may be a good idea to add some indexation to the payments and wondered how this might affect the gross income. If he chose indexation by the Retail Price Index (RPI) then the gross annual income would reduce to £3,784, a very significant drop in gross annual income.
So you can see that by using an annuity calculator it is very easy to play with the options to help you decide which the best annuity is for you.
The above rates are for information only and have been provided by the relevant insurance companies and should be only used as a guide. We taken reasonable care to ensure that the above rates are accurate but we accept no liability for any action arising from their use.
Annuity Rates are subject to sudden changes and only formal annuity quotations issued by an insurance company provided guaranteed rates.