Why annuities are an essential tool for clients' financial future
- Describe why clients' retirement income needs are changing and how the annuity market has developed.
- List the different types of annuities including lifetime, enhanced and fixed term.
- Identify the importance of advice in the annuity market and why annuities can be an essential tool for clients.
- Describe why clients' retirement income needs are changing and how the annuity market has developed.
- List the different types of annuities including lifetime, enhanced and fixed term.
- Identify the importance of advice in the annuity market and why annuities can be an essential tool for clients.
According to the Office for National Statistics, in just 20 years’ time the UK’s population is predicted to hit 74m – 18 per cent of that population is set to be people aged 65 and over.
Planning for the future has never been more important, particularly when considering the options available to help provide peace of mind and financial support in retirement.
This is where financial advisers play a key role. By helping those aged 55 and over to make informed choices about retirement planning, particularly when it comes to understanding and purchasing annuities, advisers can help retirees plan their financial futures.
The annuities market has experienced a lot of change over the last few years following the introduction of pension freedoms in 2015. Since then, the market has started to settle and rates are increasing, making annuities an attractive option for retirees.
Lifetime annuities do pretty much what they say on the tin – provide a guaranteed income for life in exchange for all or some of the money in a pension pot.For the right client, annuities can provide the assurance and peace of mind of a regular, guaranteed income in retirement.
They can also provide financial security for any dependants, if that is what the client wants.
For those with medical conditions or certain lifestyle choices, annuities can also be enhanced to offer a higher rate of income, providing the right health information is captured at the outset.
It is worth remembering that an annuity may not always be the right choice for every customer, but by not including these important products in the retirement toolkit, advisers could be missing a trick.
Lifetime annuities
Lifetime annuities do pretty much what they say on the tin – provide a guaranteed income for life in exchange for all or some of the money in a pension pot.
To buy our lifetime annuity, your client must be 55-years-old or over and have at least £5,000 to invest after withdrawing a tax-free cash lump sum and paying any adviser charges if applicable.
There are a number of different options to consider when taking out an annuity and each of these will affect how much money is paid out as an income. Explaining this clearly to a client is key, so that they understand what they are getting and when they will get it.
The ways in which money can be taken from an annuity are:
