Buying a guaranteed regular income for life (an annuity)

Sun Life Financial of Canada

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If you want to make sure you’ve always got money coming in, and know exactly how much, you might want to use some or all of your pot to buy an annuity. An annuity is an agreement with an insurance company. You give them your money and, in return, they give you a guaranteed regular income for the rest of your life.

There are lots of different kinds of annuity, so it’s worth shopping around to find out what’s best for you. There are three reasons for this:

  • You’ll want an annuity that meets your needs – for example, if you’ve got a partner or a child, you might want an annuity that would pay them an income if you die first.
  • If you’ve got a medical condition or lifestyle that could reduce your life expectancy, you might be able to get an ‘enhanced annuity’, which pays you a higher income.
  • Different insurance companies might offer a different income in return for the same amount of money.

You pay tax on your pension income, so it’s important to make sure you’re getting as much as possible.

We don’t offer our own annuities. Instead, we work with Legal & General, who offer a range of annuities and will honour any annuity rates that we’ve guaranteed on your pension pot, provided you meet a few conditions. To find out more, go to Legal & General’s website or call them on 0800 316 3062. Legal & General is a separate company from Sun Life Financial of Canada, so you should read their terms and conditions when you use the site.

Make the right choice for you – annuities

If you’re like most people, the money in your pension pot will need to last for the rest of your life. So before you make any decisions, it’s important to get all the information you need to feel confident that you’re making the right choice for you.

We’d recommend you read a short guide the government has written, called ‘Your Pension: it’s time to choose’. Also, try out the free annuity planner from The Pensions Advisory Service.

If you’re thinking about buying an annuity we’d recommend you go to Pension Wise to find out more.

We can give you general information about the kinds of questions you might want to think about. But for advice that’s specific to you, you’ll need to talk to a financial adviser. We’d always recommend you talk to one before making any big decisions about your money. You can find a financial adviser at www.unbiased.co.uk. They’ll probably charge you for their time.