If you’re planning to take your pension as an annual income, shopping around for the best deal could prove to be a savvy move, potentially giving you more cash in your pocket every month.
We regularly hear from customers who are looking for the best pension annuity provider to provide them with a regular income in retirement, and the advisors we work with have strong experience in this area. So don’t hesitate to get in touch if you’re looking to purchase an annuity and want to be sure of getting the best possible deal.
In this article, we’ll take a look at the options available if you’re looking for an annuity provider, and some of the issues you might want to consider. We’ll also list some of the top annuity providers in the UK, along with a brief summary of what they offer.
This article will cover:
- What are the different types of annuity providers?
- Variable annuity providers
- Fixed annuity providers
- Purchased Life annuity providers
- With-Profits annuity providers
- Temporary annuity providers
- Deferred annuity provider
- Impaired life annuity providers
- List of annuity providers in the UK
- Why speak to an adviser about annuity providers?
- Speak to an expert on annuity providers
Different types of annuity providers and what they offer
An annuity is essentially an insurance policy that pays out a regular income for life in exchange for a lump sum (provided by your pension pot), so it should come as no surprise that most of the top annuity providers in the UK are well-known insurance companies. And between them, they offer a range of annuity products with different features.
The type of product you choose will depend on your individual preferences and needs, but to give you an idea of what’s available, the following summary outlines the range of annuity product types along with their key features.
Fixed annuity providers
A fixed annuity is a policy that guarantees a (more or less) fixed income for life, making it one of the ‘safest’ options for retirement income. Its main advantage is the certainty it provides, but on the negative side, your income is fixed to a single rate set at the time of purchase, so it will also never increase, except in line with inflation depending on your policy.
Purchased life annuities come with different rates attached, and these determine the exact amount of your pension pot you will be able to take as an income each month. Rates can and do vary between annuity service providers, but they are ultimately set by market forces and can also vary over time. To take advantage of rate fluctuations, you’d need to take a variable rate annuity.
Purchased Life annuity providers
A purchased life annuity is much like a pension annuity in that it’s a guaranteed income for life, but the key difference is what you buy it with: unlike a pension annuity, you can buy a purchased life policy with a lump sum from any source, such as your savings.
Variable/unit linked annuity providers
Variable or ‘unit linked’ annuities allow you to invest your pension savings in stocks and shares or mutual funds, which could result in a bigger income. The obvious advantage of a variable rate is that you could end up much better off if the investments perform well.
The downside is that variable annuities do not guarantee an income for life, and being an investment product, the capital supplied by your pension pot could go down as well as up. You might want to consider finding a policy with built-in protection against such losses, or if the option is available to you, invest only part of your pension pot.
If this is an option you’d like to explore further, the advisors we work with will be happy to help find you the right deal with the features you require from one of the top variable annuity providers. Make an enquiry and we’ll be in touch soon to discuss your requirements.
With-profits annuity providers
A ‘with-profits’ annuity has some of the benefits of a variable annuity, but with more certainty built-in. The rate, and therefore the amount of income you’ll receive, can still go up and down, but it will not drop below an agreed minimum level, so you will always know you are guaranteed a certain regular income even when rates are low.
Temporary annuity providers
Temporary annuities, also known as fixed-term annuities are policies that pay out across an agreed length of time instead of being spread across your estimated lifetime. Because of the certainty, this provides to the insurer, you can often get better rates on temporary annuities.
You can also set them up to transfer to a spouse or other named person if you die before the end of the term. However, a temporary annuity could also run out during your lifetime, so in this respect there is a greater risk to you.
Deferred annuity providers
A deferred annuity is a type of annuity that you can purchase at retirement age, with a view to converting it into an income at a future time of your choosing. There are several possible advantages of deferring, including a longer period of investment and shorter period of taxation.
Deferral can also be helpful if rates are unfavourable, as you have the option of waiting until they pick up, giving you more for your pension pot. Annuity rates are also better the older you are, so if you can afford to defer for several years, you will receive a higher age-related rate when you start taking your pension as income.
Impaired annuity providers
If you suffer from a condition that could reduce your life expectancy, you may qualify for an ‘impaired annuity’ policy. This is a type of ‘enhanced annuity’ that can pay out a higher income provided that certain eligibility criteria are met.
It’s worth being aware that your life does not have to be in immediate danger for you to benefit from these policies. Common conditions such as high blood pressure are sometimes included, so declaring a health concern could result in a higher income.
Speak to an expert if you think you might qualify for one of these products and want to know your options.
UK annuity providers
There is no shortage of companies providing annuities in the UK, so it helps to have an idea of which providers offer the type of policy you’re after before making a decision. If you want to be sure of getting access to the best UK annuity providers, however, we strongly suggest that you speak to an expert who has a view of the entire market and can direct you straight to the most suitable provider based on your specific needs and preferences.
The section below is just a snapshot of some of the providers that offer annuities at time of writing, but there are many more including some that don’t work directly with the public. If you’d like to have a no-obligation consultation with an advisor who specialises in this field, don’t hesitate to make an enquiry and we’ll find you a suitable expert for bespoke annuity advice.
Aviva is one of the best known UK annuity providers and it makes its annuities available to new or existing customers aged 55-74. Its products include ‘with profits’ annuities, standard purchased life annuities and more. However, you will need to have at least £10,000 in your pension pot if you are with another provider.
You can also use the Aviva annuity calculator for an instant illustration of what your pension pot might translate to if you decide to purchase this product, based on currently available Aviva annuity rates, but don’t forget that rates can change. For more info on products including the Aviva purchased life annuity, Aviva enhanced annuity, and fixed-term annuity, Aviva has a dedicated section on its website.
Legal & General
Legal & General offers pension annuities to those over 55 years who have at least £5,000 in their pension pot. A L&G annuity policy can be tailored according to factors such as your health and whether you’d prefer to be paid monthly or annually.
You can use the Legal & General annuity calculator and get an online quote free of charge on the site.
Prudential has a wide range of annuity products to help you meet your retirement goals. As one of the largest variable annuity providers, it has several different variable policies to choose from, including some that can be tailored with optional benefits to suit your needs. It also offers fixed index annuities for those seeking a more predictable income.
Visit the provider’s website for details on the full range of Prudential annuity products, including Prudential with-profits annuity, Prudential variable annuity and more.
Standard Life offers annuities, referred to as a ‘guaranteed income for life’ on its website, with a choice of features and optional add-ons, including enhanced policies, death benefits and temporary annuities.
You can also use the Standard Life annuity calculator on the site for an approximation of what your pension pot could amount to as a regular income, with current Standard Life annuity rates applied.
There are several LV or Liverpool Victoria annuity products to choose from, including the LV fixed term annuity and several fixed rate annuities with different protection options available such as death benefits, guarantee periods and protection against inflation. Take a look at the LV annuity calculator online for an idea of the income you’d receive based on the amount you wish to transfer from your pension pot.
AXA offers a broad range of annuities including fixed, variable and temporary annuities, alongside some more specialist products such as the AXA PPP care home annuity for those with specific care needs
AXA annuities are not available direct to members of the public, so you would need to work with a specialist broker to access its annuities – please get in touch if you’d like us to introduce you to an advisor with experience in this field.
Friends Life is now part of the Aviva group, so if you purchased a product through them – including the Friends Life immediate care annuity or any other Friends Life enhanced annuity – you will still be covered, but Aviva will now handle your annuity. You’ll therefore need to contact Aviva annuity customer services for any queries, and use the Aviva site to administer your account.
Phoenix Life sells a wide range of annuity products with options to tailor products according to your circumstances. Its current offer includes Purchased Life Annuities, temporary annuities, deferred annuities, unit-linked annuities, enhanced life annuities, immediate needs annuities, joint life annuities and more. You can apply for a Phoenix annuity directly but be sure to seek expert advice before doing so, to make sure they’re the right provider for you.
Royal London is another insurer offering annuities, which it refers to in company literature as a ‘secure income’. Its annuities can be tailored with a range of ‘bolt-on’ features such as inflation protection, named beneficiaries after death and enhanced products for those with health conditions.
As a major player in the pensions world, Scottish Widows offers a range of standard and enhanced annuities. Its products are flexible and can be tailored according to the frequency of payments and a ‘guaranteed period’ in which income will continue to be paid to your estate if you die within the first ten years.
Available to those aged 55-85 with a minimum of £10,000 pension pot, the Hodge Lifetime annuity is a fixed product providing a stable income that is set at the rate you purchase it at, for life. It isn’t available direct to the public, so you’ll need to instruct an expert.
Hodge annuities can be purchased with a guaranteed period that will continue to pay out to a named beneficiary after your death. However, they do not offer any enhanced features or favourable rates for those in ill health, so you would need to seek a different provider if you think you might be eligible for an impaired life annuity.
Hargreaves Lansdown provides a range of annuities and states that over half of its customers have secured an enhanced annuity due to a health condition or lifestyle choice. A table featuring up-to-date Hargreaves Lansdown annuity rates is published on the company’s public website on a weekly basis.
Just offers a range of annuity products including investment-linked (variable) annuities, fixed-term annuities and two types of lifetime annuities: standard and enhanced, with enhanced annuities offering better rates for those with certain common health conditions.
Just retirement annuities are not available direct to the public, so you’ll need to work with a professional advisor to access its products. Get in touch if you’d like us to introduce you to one.
Why speak to an expert about annuity providers?
Once you’ve chosen and purchased an annuity there is no going back, so it’s absolutely crucial that you make the right decision for you.
For this reason, many people choose to work with an experienced independent advisor, who can help them to navigate this sometimes complicated market and give sound, unbiased advice.
As well as helping you through this important once-in-a-lifetime decision, pensions advisors can give you access to providers that don’t work directly with the public, meaning they’ll have a more complete picture of the annuities available to you. This way, you can be confident of not missing out on the best deals.
Speak to an annuities expert
If you’re thinking of purchasing an annuity of any type, it’s recommended that you seek professional advice before deciding which provider and product to go for.
For access to a specialist in annuities, call Online Money Advisor today on 0808 189 0463 or make an enquiry online and we’ll be in touch soon to discuss your requirements.
The pensions experts we work with are highly experienced in this area, and regularly advise customers in your situation.