What is an annuity?
Many individuals will save into a pension during their time working, meaning that overall a pension pot should be built up. As people retire they will usually use this money they have saved to by an annuity, this transaction can usually occur once. Basically an annuity will be an annual retirement income that is paid to someone for the rest of their life.
The government have estimated that around five million people have bought annuities and from this the receive a total income of £13bn a year. You can sell annuities but this isn’t the best way for most people because of the high tax charges.
As from April 2017 pensions will be able to sell their annuities for a lump sum. Meaning that people who have bought an income for life with their pension will now be able to reverse this. It is said that this should help people to avoid making bad decisions when dealing with annuities. Annuity sellers are recommended to get independent financial advice if the sums involved are large enough.
For more advice or help on this call our Manchester offices to speak to a member of our team on 0800 020 9542 or email hello@JacRox.co.