Financial advice with regards to risk mitigation and investments generally is an area which places considerable pressures on the professionals who operate such businesses in a tightly regulated market. The demarcation line of products sold between those that are regulated and those that are not is not always clear. In our experience we have found Square One, staffed and operated by a number of qualified personnel, to be responsive and clear at all times and will continue to use them as our first port of call.
An annuity is simply an exchange of a lump sum in return for a guaranteed taxable income. There are many different types of these annuities:
- Compulsory purchase annuity
- Purchased life annuity
- Enhanced annuity
- With profit annuity
- Unit linked annuity
- "Third Way" annuity
There are number of different annuities which can be confusing. Unusually with this type of investment you get a much better rate of return for being an unhealthy smoker living in one of the poorer regions of the country.
Annuity rates (the amount of your income compared to the capital you have) will vary depending on your health, interest rates and the company that you give your money to.
Many people still simply sign the paperwork that is sent to them by their existing pension provider. It is highly unlikely that this is the best company to buy you pension income from. This could mean that you are getting anything up to 20% (1/5th) less a year at the outset then you could have buy asking somebody to review your options. As once the income is fixed it cannot be changed, and most people are likely to live for at least 20 years into their retirement. It is a very cost effective conversation to have.
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