What’s next for annuities? Pension experts reveal how to get the best deal for your retirement

PENSION annuity rates and income are rising and experts accidental present is simply a bully clip to bargain one.

But the instrumentality is to find the best woody for your aged age.

Ellie Smitherman talks you done it . . . 

IS AN ANNUITY RIGHT FOR YOU?

ANNUITIES are status plans pensioners tin bargain to supply them with a fixed regular income for the remainder of their life.

Rates are usually shown arsenic however overmuch money you volition person per twelvemonth for each £100,000 you wage in.

For example, an annuity complaint of 5 per cent would mean you get £5,000 for each £100,000 you put – truthful if you paid an annuity supplier £50,000, you would get £2,500 a year.

If you bargain an annuity, you tin opt to instrumentality a 4th of your pension cookware arsenic a tax-free lump sum.

The remainder is past converted into a taxable beingness income.

Exactly however overmuch an idiosyncratic gets from an annuity depends connected their idiosyncratic circumstances, specified arsenic if they are successful bully health, their beingness expectancy and however overmuch their pension is worth.

Annuity rates person surged successful caller years.

Average annuity rates for a 65-year-old are presently 7.18 per cent, up from 5.11 per cent successful January 2022.

The latest information from the annuity examination instrumentality of fiscal services steadfast Hargreaves Lansdown’s shows a 65-year-old with a £100,000 pension cookware tin get up to £7,146 a year.

This is up 43 per cent connected what they would person got conscionable 3 years ago.

But wealth paid from an annuity is taxable to income tax.

And taking wealth from a pension successful a lump sum tin impact your means-tested benefits – they could beryllium reduced oregon adjacent stopped.

What's adjacent for rates?

RETIREES are rushing to fastener successful precocious rates, says Helen Morrissey, caput of status investigation astatine Hargreaves Lansdown.

This is due to the fact that galore deliberation the Bank of England volition chopped interest rates in the adjacent fewer months, and this could person a antagonistic interaction connected annuity rates.

Helen told The Sun: “After years connected the sidelines of the status income market, annuities are enjoying their clip successful the sun, arsenic expanding involvement rates pushed incomes skyward.”

Emma Watkins of pension supplier Scottish Widows added: “While it’s hard to foretell the future, galore deliberation annuity rates volition travel the basal complaint down implicit the adjacent fewer years – portion staying good supra historical lows.”

But experts impulse retirees not to bargain excessively overmuch into the predictions.

Lorna Shah, managing manager of Legal & General Retail Retirement, said: “While immoderate commentators are suggesting annuity rates mightiness change, economic and governmental uncertainties mean annuity rates tin beryllium precise hard to predict.

“Instead of trying to marque a determination based connected rates, it’s important for radical to deliberation astir idiosyncratic needs and however antithetic products tin enactment unneurotic to springiness them the champion effect implicit the agelong term.”

HOW TO GET THE BEST DEAL

AS you get person to status age, your pension supplier volition nonstop you accusation astir the worth of your pension cookware and the options disposable to you to instrumentality wealth from it.

Some providers tin connection you an income directly.

But remember, you don’t person to instrumentality an annuity offered by your existing provider.

Buying an annuity is usually an irreversible determination truthful it’s important to see your options, take the close benignant and get the champion woody you can.

Research by Hargreaves Lansdown recovered the quality betwixt antithetic providers’ rates tin beryllium worthy thousands successful retirement.

So store astir for your annuity – it astir ever gives you a higher income successful retirement.

Use tools specified arsenic the Money Helper’s annuity examination tool, oregon usage annuity brokers to find the champion deals presently disposable connected the marketplace and tailored to your circumstances.

You tin find a broker online but cheque reviews and fees.

Only non-advised providers volition springiness you a punctuation without you taking proposal first.

They volition simply connection you the champion complaint they tin find connected the market.

There whitethorn beryllium annuity providers offering higher rates via lone a fiscal adviser.

If you are adjacent to status and unsure astir annuities oregon making the astir of your pension pot, Pension Wise tin help.

It’s a escaped work from government-backed fiscal guidance adviser, MoneyHelper.

To find an autarkic fiscal adviser, spot the Unbiased website, but you volition apt request to wage for their advice.

You tin besides comparison annuities yourself connected the Annuity Ready website .

If unsure however overmuch to save, the Retirement Living Standards website shows the outgo of antithetic status lifestyles.

Then usage a status income calculator to spot however overmuch you request to prevention to scope the level you desire.

Bear successful caput determination are tons of types of annuities truthful bash your probe and get proposal to find the champion acceptable for you.

There are pitfalls, too, specified arsenic the information you cannot alteration your caput – annuities are a lifelong bargain truthful you request to beryllium certain.

This besides means if there’s a accidental your income needs mightiness alteration drastically successful the future, an annuity mightiness not beryllium the champion enactment for you.

Remember not to automatically judge the annuity complaint offered by your pension supplier without checking what is connected connection crossed the remainder of the market.

THE BEST ALTERNATIVES

IF you privation much flexibility implicit your income you mightiness privation to see a antithetic approach.

Most retirees present opt to permission their pension invested successful the banal market, and instrumentality income arsenic and erstwhile they request it, via “drawdown”.

As with an annuity, you tin retreat a 4th arsenic a tax-free lump sum, with the remainder taxed arsenic income.

Drawdown is much flexible than an annuity, and returns whitethorn beryllium higher, but savings are exposed to greater volatility.

If determination is simply a banal marketplace crash, the money worth volition fall, truthful your income needs whitethorn not beryllium met.

If you are considering a draw-down, question fiscal advice.

You are not constricted to picking 1 option. You tin premix and match.

So you could usage immoderate of your cookware to bargain an annuity and permission the remainder invested to gully an income from it.

FIVE FACTORS KEY TO RATE YOU’LL GET

VARIOUS factors interaction precisely however overmuch income you get . . . 

• GILT YIELDS: Annuity providers thin to money them utilizing returns from authorities bonds called gilts. The Government pays the annuity supplier a fixed involvement amount, tied to the Bank of England involvement basal rate. When the basal complaint rises, gilt yields besides increase, subsequently boosting annuity rates, arsenic observed successful caller years.
• THE VALUE OF YOUR PENSION: The size of your cookware is the superior origin determining your annuity income. The much savings you allocate to bargain an annuity, the higher your income volition be.
• AGE AND LIFE EXPECTANCY: How agelong you are expected to unrecorded importantly influences the annuity complaint you are offered. The much years this is, the little your rate, arsenic the supplier volition beryllium paying you for a longer period. For example, a 60-year-old volition typically person a little income than a 70-year-old.
• YOUR HEALTH: Poor health, smoking oregon being overweight tin pb to a shorter beingness expectancy, which whitethorn suffice you for a amended annuity rate. It is important to state immoderate wellness conditions to your provider.
• YOUR POSTCODE: Annuity providers usage your postcode to estimation beingness expectancy. If you reside successful an country with a lower-than-average beingness expectancy, you whitethorn beryllium offered a somewhat higher rate.

'There's been a unreality implicit my star powerfulness payments'

Q: I HAVEN’T been paid for my star panels successful astir 9 months and I don’t cognize why.

I got them successful 2011 and my vigor supplier, Ovo, usually gives maine wealth for vigor I make each 3 months.

But I haven’t been paid since February this year, covering from December 2023.

I person complained but haven’t had a consecutive reply arsenic to what’s causing the delay. Can you help?

Leighton Reardon of Blackwood, Caerphilly

A: SOLAR panels tin beryllium a large semipermanent investment, arsenic your energy supplier should reimburse you for immoderate vigor you make yourself and proviso backmost to the grid.

Unfortunately, determination are often requirements you person to travel to guarantee you support getting your payments.

In your case, for example, Ovo Energy explained that you request to taxable a “meter verification” each 2 years.

This involves sending a photograph of your metre to the steadfast truthful it tin cheque your latest reading.

You were expected to taxable your latest photograph astir July 2023, but Ovo said it didn’t person it until August this year.

A spokesperson for the steadfast said it sent you a reminder successful February.

But you intelligibly had not realised this was stopping you receiving your payments, and I’m acrophobic astir wherefore this was not made wide erstwhile you repeatedly called to complain.

You said unit connected the telephone “fobbed you off” and didn’t recognize the problem.

I person asked Ovo to investigate, arsenic I consciousness your occupation could person been easy resolved implicit the phone.

Ovo has present reached retired to explicate what happened and what you request to bash successful future.

And a spokesperson said you volition present beryllium paid for the afloat play from December 2023 to September 2024 by aboriginal November, which you are blessed with.

A spokesperson for Ovo said: “We’re gladsome to enactment this close truthful Mr Reardon tin payment from his panels.

“Our squad continues to beryllium connected manus to enactment with immoderate further questions.

“We promote customers to interaction america if they person immoderate questions astir their solar panels.”

Premium prizes instrumentality a hit

MILLIONS of Premium Bond holders volition spot their chances of winning currency tumble adjacent month.

National Savings & Investments has slashed the prize money rates for the 2nd clip this twelvemonth successful a stroke to savers hoping to people a win.

Ellie Smitherman explains what you request to know . . . 

WHAT IS CHANGING? Premium Bonds are a benignant of savings relationship that doesn’t connection involvement payments similar accepted accounts.

Instead, you’re fixed the accidental to triumph a prize successful the gully each month.

The prize money rates are to beryllium chopped to 4.15 per cent from 4.4 per cent from December.

Savers volition spot their chances of winning successful the monthly gully descent from 21,000 to 1 down to 22,000 to 1.

The prize money was already chopped earlier this year, falling from 4.65 per cent successful March.

NS&I is besides cutting involvement rates for Direct Saver and Income Bonds to 3.75 per cent from 4 per cent wherever it has been since November 2020.

HOW MUCH CAN YOU WIN? There volition proceed to beryllium 2 winners of the apical £1million prizes from December’s draw.

And the fig of the lowest £25 prizes volition summation from 1.49m to an ­estimated 1.5million successful December.

But the fig of winnings betwixt the biggest and smallest prize volition each fall.

Overall, determination volition beryllium an expected 5,726,438 prizes worthy £435,686,300 successful December, down from 5,991,306 prizes worthy £461,330,525 this month.

Each £1 you enactment successful ­Premium Bonds is an introduction into the monthly prize draw.

All bonds person an adjacent accidental of winning and the much you buy, the greater your chances.

SHOULD I CASH IN? Two thirds of ­Premium Bonds holders person ne'er won, according to caller figures from a Freedom of Information reguest obtained by savings level AJ Bell.

These savers whitethorn person missed retired connected important returns successful a higher paying currency relationship oregon by investing wealth – peculiarly if they person held the bonds for a agelong time.

If you are looking to marque a decent and reliable instrumentality connected your cash, galore savings accounts wage a amended rate.

For example, you tin presently gain 5 per cent involvement with app-based supplier Chip connected its casual entree account.

It’s worthy noting that Premium Bond winnings are tax-free.

Anyone who has utilized up their yearly ISA bounds oregon idiosyncratic savings allowance could payment by ­saving into Premium Bonds.

Premium Bonds are government-backed, meaning your wealth is harmless and there’s nary hazard of losing it.

But different banks and gathering societies are protected by the Financial Services Compensation Scheme, which covers up to £85,000 of wealth per person, per fiscal institution.