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Buy Annuities - Index Linked Annuities Will Protect Your Future Lifestyle Be Warned! When you buy annuities on the open market, it's prudent to seek the advice of an independent financial advisor. This is a major decision because once the decision has been made, you're stuck with the annuity you have bought for the rest of your life. There is no going back! The difference between annuity rates from providers can be considerable. The best rate can boost your retirement income by up to 25%. Although your current pension provider may offer you an annuity rate, you don't have to purchase it from them. Don't rush to buy annuities. Be patient and search the open market for the best annuity rates available.
In the UK, retirement annuities are paid out of Retirement Annuity Contracts (RAC) which were a type of pension plan that individuals could take out before 1 July 1988. After this date they were replaced with personal pensions, but those started before 1 July 1988 can carry on until the person retires. RACs were only applicable to employees without an occupational scheme or to the self employed, as long as they have earnings subject to UK taxation. When the Personal Pension Plan (PPP) was introduced on 1st July 1988, RACs were allowed to retain certain features (such as annuities were paid gross) that did not apply to PPPs. Most of these features were removed on 6th April 2006 under new HM Revenue & Customs rules. All annuities received after 5th April 2007 are paid net of tax under the PAYE system. Purchased life annuities pay a guaranteed income for life and you can buy annuities with money from any source, not just from your retirement investment or pension income. There are many options for you to choose from:
If you're married you can opt for joint life with the above options. Smokers and people with ilnesses have more preferential rates due to their circumstances. When you buy annuities, you'll have to consider which is the best option for you. If you're receiving a purchased life annuity it's probably being paid to you after basic rate tax has been deducted. If you don't think you should be paying tax on it - or if you think you should be paying less tax - because you're on a low income you can claim a tax refund. In the US, there are two possible phases for an annuity - the deferral phase and the income phase. During the deferral phase, you deposit and accoumulate money into a retirement account. During the income phase, the insurance company makes income payments that may be set for a stated period of time (fixed term payments) or continue payment for the rest of your life (lifetime payments). Fixed term payment is annuity for a specific period of time and is normally used to fund a need that will end when the period is up (such as funding the premiums for a term life insurance policy). A fixed term payment annuity is not suitable if you are thinking of using this as your retirement income as you may outlive the term of the annuity. A life annuity is more suitable for retirement income purposes. This will guarantee that you receive retirement income for the rest of your life. Annuity income is subject to tax at ordinary income rates. If you are fast approaching retirement you should contact an independent financial advisor for advice on how to buy annuities on the open market. An independent financial advisor is not attached to any annuity company and charges a fee for their service. They will search the market for the best annuity rates because their services are not commission based. ================= Information resources:HM Revenue & Customs
Retirement planning helps you get more out of life in retirement
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