Annuities

Annuity FAQs

• What factors affect my annuity income?

  Many different factors will affect how much annuity income you get. They include:

  • The size of your pension - The more of your pension you use to buy an annuity, the higher your income is likely to be. Although, you may not want to lock your entire pension into an annuity in one go.
  • Annuity rates at the time you buy - Annuity rates determine how much income you could get. They change all the time because they’re linked to gilt yields. They’re also sensitive to interest rate changes.
  • Your age, health and lifestyle details - You’ll tend to get a higher annuity income the older you are and if you disclose health and lifestyle details. Even confirming your height and weight could mean you get an enhanced rate.
  • The type of annuity and features you choose - When you set up an annuity, you can choose for your income to increase over time, and to receive monthly or annual payments. You can also choose if your income should continue to your spouse when you die.
• How safe is my annuity?

  The annuity providers on our panel and Hargreaves Lansdown are covered by the Financial Services Compensation Scheme (FSCS). You may be entitled to compensation from the FSCS if Hargreaves Lansdown or your annuity provider cannot meet their obligations. This will depend on the circumstances of your claim.

  Eligible claimants can make a claim to the FSCS where a provider isn’t able to meet claims against it. The FSCS would initially look to transfer the annuity to another provider or, if this isn’t possible, they would look to get a substitute annuity within the compensation limits. If they can’t find a substitute, the policyholder will receive compensation under the FSCS. The compensation is 100% of the value of the claim with no upper limit.

• What happens to my annuity when I die?

  This depends on the annuity options you choose. If you opt for a single life annuity without a guarantee period, the income will stop when you die. If you choose a joint life annuity, the income will continue to be paid to your beneficiary (usually your spouse or partner) after you die. If you choose a guarantee period, the income will be paid to your estate or your beneficiaries for any remaining guarantee period after you die.

  More on annuity options

• Is my annuity rate guaranteed?

  After you get an annuity quote, the rates on the quote are guaranteed for a limited time only. Annuity rates change regularly, they may go up or down in the future. It’s only when you buy an annuity that you lock in a guaranteed rate for the rest of your life.

• Can I get a higher income by providing details about my health?

  Yes. This is known as an enhanced annuity. Providing details like your height, weight or how much you drink could mean you get a higher annuity income.

  More on enhanced annuities

• What are the types of annuities?

  Types of annuity options include single life, joint life, guarantee periods and value protection. When you set up an annuity, you can choose for your income to increase over time, and to receive monthly or annual payments. You can also choose if your income should continue to your spouse when you die.

  More on annuity options

• Are there any annuity alternatives?

  There are three main ways you can access your pension: by getting an annuity, moving money into drawdown and taking lump sums. However, an annuity is the only option that will provide you with a secure income for life. You can choose to mix and match your retirement options, which could help you find the right balance of security and flexibility.

  More on retirement options