One of the first things to consider when deciding whether to choose a pension annuity is the details of your pension scheme or pension schemes.
Some people have a number of pension schemes with different amounts saved, different features and different benefits. When approaching retirement, pension providers typically issue an annuity quotation.
In order to plan your pension annuity and take advantage of the best possible offer, it is a good idea to assess your situation and your retirement needs. Answering a number of questions relating to your individual situation may help you to plan your pension annuity. For instance:
- How much retirement income do you require?
- How much are all your pension schemes worth?
- Do you need/desire a cash lump sum from your pension?
- How much of your pension do you wish to devote to providing an income?
- Do you wish your dependants/anyone else to receive an income in the event of your death?
Pension annuity tax
The income from your annuity is subject to tax, and your pension provider should illustrate these figures. To accurately assess your financial situation and plan for retirement, it is important to work out your post-tax retirement income.
Choosing your pension annuity
Once you have researched your pension situation and your retirement intentions, it remains to choose a pension annuity or other pension option that meets these wishes.