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Use your pension pot to buy a guaranteed income for life


For many people, a traditional annuity will provide a good solution in retirement.

Purchasing an annuity offers some certainty as to income levels, and surety of payment.

An annuity can be purchased from an insurance company, with all or part of your pension pot, and can take various forms. It doesn't have to be bought from your pension provider, and in fact it is important to shop around to ensure that you are getting the best value for money.

If you have certain health issues, or you're a smoker, it may also be possible to secure a higher level of income.

At Wesleyan, we're partnered up with the UK's largest annuity-only broker, Retirement Line, to offer those of our customers who are looking to buy an annuity access to the most competitive rates in the market.

This follows Financial Conduct Authority (FCA) legislation that came into force in Spring 2018, meaning that all annuity providers now have to provide their customers with a 'best in market' comparison quote.  

You have the option to take up to 25% of your pension pot as a tax free lump sum and use the remainder to buy an annuity.

You can choose an income that:

  • is paid for your life, and that of a dependant in the event of your death
  • is guaranteed to be paid for a specific period of time, even if you die during that period
  • is either level or increases over time
  • is linked to an investment, so that your annual income fluctuates based on the returns of that investment.

Annuity

Advantages Disadvantages
Simple and easy to understand. No ongoing reviews required Annuity rates are currently low. If annuity rates go up you can't take advantage of the change
Income is secure Lack of flexibility - once set up it cannot be changed
Income will never run out Cannot take account of changing circumstances
Income in not affected by stock market falls (unless you buy and investment-linked annuity) Cannot take advantage of stock market rises (unless you buy an investment-linked annuity)
Some medical conditions can increase income paid If level income is selected, the real value of income may be eroded over time due to the effect of inflation

When deciding on the right course of action for you, it is important to get guidance and, if appropriate, advice.

You can get guidance to help you understand your pension options from pensionwise.gov.uk, a free and impartial Government service.

Regulated financial advice can also be sought to help you decide how to take your pension. At Wesleyan we're here to help and our Wesleyan Financial Services Consultants will help you find the solution that's right for you.

Contact us

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Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

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