Posted on: 2nd March 2012
In this day and age rampant inflation, increasing longevity, plummeting gilt yields and a myriad of choices facing today’s retirees combine in making the need for independent financial advice at especially important.
Annuities are a case in point.
By simply taking advantage of the ‘Open Market Option – OMO’ or, in other words ‘shopping around’, can potentially improve the level of income by upwards of 25%, and those who smoke or in less than perfect health can see this percentage improve further via specialist providers.
Simply finding the best rate is only one of the important roles independent advice fulfils.
Other questions to be answered include whether to take your tax free cash, now known asCommencement Lump Sum (PCLS), at the start and should a dependents be included? Do I need to allow for inflation? Is a Guarantee appropriate? How often do I need my income?
These are just a few of the important considerations taken into account during the advice process and these will impact on the overall retirement income you are paid. And once an annuity is put in place the terms cannot be altered.
Although anprovides an income for life with a degree of certainty the fact that they are relatively inflexible means that some clients need to seek an alternative.
For example, you need to consider if control of your retirement fund/income or how it is invested post retirement is important. What is your tax situations as you go through retirement.
Or you would like to leave something to your beneficiaries upon your death. It may be a combination of annuities and other options could be more appropriate.
The huge choice of solutions both within the annuity space and beyond, together with tax considerations, death benefits and risk mean that independent advice when considering your options is vital.