What is a pension annuity?
A pension annuity converts your pension fund into a regular income for life. Your pension provider will normally offer you an annuity when you come to take your benefits, but what many people don’t realise is that they can shop around and potentially get a better deal through other annuity providers.
How can Saga help?
The Saga Annuity Service offers competitive rates and has a dedicated and experienced team provided by Legal & General who can help you through the process of buying a pension annuity. If you are in any doubt whether this is right for you, you should seek expert advice.
If you choose to buy your annuity through Saga, the Saga Annuity Service will do everything they can to make the purchase as easy as possible. If you accept the rate offered through Saga by returning the application form, the Saga Anuuity Service will contact your pension provider to arrange for the funds to be transferred so your annuity payments can start as quickly as possible.
Annuity Features
A fixed income that will never fall
If you decide to take a fixed income this will never fall nor go up. It may therefore be at risk of the effects of inflation, which means your money may not stretch as far in years to come.
An increasing income that goes up each year
An increasing income on the other hand can increase each year by a fixed percentage of anything up to and including 10% or you can choose to have it linked to increases in the Retail Prices Index (RPI). So as inflation rises, so will your income. If inflation falls, however, your income will not. The option to increase in line with RPI is not available if enhanced rates are applied.
Annuity Plus
If you suffer from certain lifestyle health risks, then you may be eligible for a higher income than that of the standard annuity. This is aimed at:
Smokers
People who are overweight or underweight
People with high blood pressure
People with high cholesterol
People with diet controlled type 2 diabetes.
Unlike some other providers, the Saga Annuity Service, provided by Legal & General will automatically ask you some questions to see if you qualify for even more income in retirement.
Enhanced annuity
If you suffer from more serious health conditions then you may be eligible for an enhanced annuity. After answering the initial medical questions to identify if you qualify for an uplift, a detailed medical questionnaire will be sent to you, which will need to be completed. On average this could mean you receive up to an additional 20% income.
When you contact the Saga Annuity Service for a quote, they will automatically check to see whether you qualify for an enhanced income due to any lifestyle or health conditions.
Payment Options
Choose your type of income
You can choose to have either a fixed income, paying you a set amount each year, or one that increases year after year.
Payment frequency
You can choose how and when you have your income paid. You can choose from monthly, quarterly, half yearly or yearly payments and receive it at the start of the payment period (in advance) or at the end of that period (in arrears). For example, if your annuity is completed on the 10th of the month and you've chosen to receive your payments monthly, selecting 'in advance' would mean you would receive your payment on that day. If you select to have your payments in arrears you would receive your income on the 10th of the following month.
An income for your dependant
A pension annuity will pay you an income for as long as you live and will cease to be paid when you die. However, you can arrange for your income to continue after your death to a surviving spouse, registered civil partner or financially dependent partner. Please note that if you choose this option, your starting level of income will be lower.
Guaranteed minimum payment period
You can choose to add a guaranteed minimum payment period, of up to 10 years, to your annuity, which would mean that if you were to die within that period, your income would continue to be paid to a person nominated by you. Please note that if you choose this option, then your starting level of income will be lower.
Summary
- Your income will not fall
- You have the option to take automatic increases year on year
- You have access to enhanced terms if in poor health
- You choose how and when you receive your income
- You can choose to add an income for surviving spouse, registered civil partner or financially dependent partner (if selected)
- You can choose to add a guaranteed minimum payment period.
Call the Saga Annuity Service on 0800 046 2872 for a no obligation quote. Please have details of your pension provider and pension amount when you call. Lines are open 9am-5pm Monday to Friday. Calls may be monitored and recorded for security and training purposes. Call charges will vary.