Pensions and Annuities


Advice on your pension and buying an annuity

There will come a time when you will need to make some important decisions about how to use the retirement pension fund that you have successfully built up during your working life. These decisions involve how you intend to draw your pension income to ensure the benefits best suit your needs in retirement. It is normal for people who are retiring to convert a portion of their pension fund into a tax-free lump sum with the balance used for buying an annuity. QuoteRack brokers and financial advisors are well-placed to help you calculate your pension and to offer the best deal for your particular circumstances and they will work hard to get you relevant pension advice and the best quote possible for your pension annuity.

When choosing or buying an annuity, the basic process is that you swap your pension fund for an income for as long as you live. The amount of income the insurance company offers you in exchange for your pension fund is called the 'annuity rate'. Annuity rates can vary and you don't have to buy your annuity from the company that's managing your pension fund.

"I needed help to calculate my pension annuity and it turned out to be much easier than I had expected to find out what my future pension income might be, as well as the initial tax-free lump sum."

An annuity pays you an income for the rest of your life. Unlike other investments, it cannot be used up, regardless of how long you live.

You can usually take up to a quarter of the pension fund in cash, as a tax-free lump sum. You must use the remaining fund to provide taxable retirement income. Under government rules, you can normally start to take a pension at any age from 50’s (due to be increased to 55 by 2010). However, occupational money purchase schemes will have their own rules about retirement age and taking your pension.

Government rules currently say that you must buy an annuity with your pension fund by age 75. You can still take a tax-free lump sum. If you have more than one pension plan or scheme, you don't have to buy an annuity at the same time with all of them. You can also split up a single plan into separate 'bundles' and take annuities at different times from each bundle’s (called multiple annuities).

Once you've bought an annuity you can't get back any of your pension fund as a lump sum, but the annuity will carry on paying out, regardless of how long you live.

QuoteRack will send your details to specialist pension advisers who will get in touch with you to discuss the options available to you - there is no obligation for you to proceed.

Pensions and annuities - Government help

Changes to the State Pension

Visit the DirectGov website for details of changes to the State pension.

Department of Work and Pensions Website

For impartial Government information about the Pensions Service.


"I reached 55 and realised I could buy an annuity, taking a lump sum tax-free. I needed to find a way of calculating my annuity and QuoteRack put me in touch with a financial advisor who made it all very clear and understandable."