Alternatives to annuities
FREE guide to
Your options at retirement
Explore your options, the pros and cons, the benefits of the new 2011 retirement rules, and discover how you could maximise your pension fund when you retire.
Deciding how to take your pension benefits is one of the most important financial decisions you will have to make.
Below is a snapshot of information about the alternative options to a conventional lifetime annuity, however for more information on the pros and cons of each option please request our FREE guide to Your options at retirement.
If you are at all uncertain about your options, we suggest you seek advice. Please don't hesitate to contact our friendly support team on 0117 980 9940, who can answer your questions or put you in touch with one of our financial practitioners.
Income drawdown
When you retire, choosing income drawdown allows you to draw a regular variable income directly from your pension whenever you wish whilst the funds remain invested.
Income drawdown is a riskier option because your fund value can fall as well as rise depending on investment performance. You keep full control and choose and manage where your funds are invested. Find out more about income drawdown
View a comparison of income drawdown versus annuities
Phased retirement
Rather than converting your entire pension fund into an annuity or income drawdown all in one go, phased retirement allows you to set up a series of annuities or drawdown arrangements by gradually drawing on your fund over a period of time.
Each time you take benefits in this way you can take up to 25% tax-free cash, plus a taxable income from that segment. Phased retirement can be particularly useful if you don't need all the income or tax-free cash at the start, or if you're worried about death benefits.
Investment linked annuities
Investment linked annuities are designed to give you the opportunity to obtain an income that increases during your retirement, but the income is not fixed.
Unlike conventional annuities, they're linked to an investment within the annuity provider’s range so they contain an element of investment risk.
Your future income could increase if the fund grows – but conversely, if the fund value falls, your income could decrease.
Fixed term annuities
Fixed term annuities are relatively new and share some of the characteristics of both lifetime annuities and income drawdown. They pay a regular income for a limited number of years, selected from the outset.
At the end of the fixed term the investor has a lump sum available within the pension plan to reinvest for more income. In that respect fixed term annuities are more similar to income drawdown. They offer the opportunity to review the choices you have made, but there are big risks involved.
In our view, fixed term annuities will not be the answer for most people. We believe most clients who want a mixture of annuity and drawdown benefits are likely to be better off taking a DIY approach by splitting their fund simply between an annuity and income drawdown.
Important information
Some of these options are complex and income is not guaranteed. If you are at all uncertain about their suitability for you then you should seek advice.
Have a question about your annuity?
If you would like more information please don't hesitate to contact one of our annuity specialists on:
0117 980 9940
- Mon - Thu:
- 8am - 7pm
- Fri:
- 8am - 6pm
- Sat:
- 9:30am - 12:30pm
Client review
I had been concerned that buying my annuity would be difficult. However, I found your annuity service excellent - quick, straightforward and very efficient. All my questions were answered clearly and you made the application forms easy to complete. I'm sure your annuity expertise is the best in the UK and I will definitely be using you again.
Mrs Pickering, Liverpool
Did you know?
£1.6 billion worth
of annuities have been set up by Hargreaves Lansdown for 47,000 clients since 2002.