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        Updated: April 16, 2024

        Cash In an Annuity

        Planning for your retirement? Learn how to cash in an annuity and get the best returns in this guide

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        Preparing for your retirement is an important job and, since Pension Freedoms was introduced in 2015, the extra choice now available may result in making a decision more difficult. For many people who purchased an annuity before 2015 when this was the only option for defined benefit pension holders – they may now be wondering if there is any way to take advantage of Pension Freedoms and if annuities can now be cashed in.

        We receive many enquiries from individuals who have already purchased an annuity (or are thinking about doing so) wanting to know how flexible they are and if it might be possible to cash an annuity in at a later date.

        In this article, we discuss if it is possible to cash in an annuity and will cover:

        Can I cash in my existing annuity?

        If you have already bought an annuity, it is unlikely you will be able to cash it in or make any changes to it, no matter when you took it out. When you buy an annuity, the provider of your chosen product will advise you that you have a 30-day cooling off period.

        You can change your mind during this time and inform the annuity provider, usually in writing, of your decision not to buy an annuity.

        However, that’s not the same as cashing in your annuity. If you have an existing annuity, where the cooling off period has passed, in most cases it unlikely you will be able to cash it in.

        Why are annuities so inflexible?

        The reason that annuities are so inflexible and can rarely be cashed in, is because they were designed to provide a guaranteed retirement income from the pension funds each individual has built up during their working life.

        But, that guaranteed income comes at a price, which is that the provider you buy your annuity from can utilise your pension funds for their investment purpose. Regardless of the outcome of those investments, the annuity you agreed at the point of purchase will be yours during your retirement and either for life or a fixed-term, depending on the type of annuity you have chosen.

        If you’re considering your retirement options and want to know more about annuities, or if you have an existing annuity pension but think you might prefer another way to enjoy your retirement income, an annuity pension advisor can help. Get in touch with us and we’ll connect you with an expert who will answer all your questions, including about cashing in an annuity.

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        Can any type of annuity pension be cashed in?

        There are different types of annuities, including:

        However, regardless of which type of annuity you buy, in most cases it’s highly unlikely you can cash in an annuity pension early, before the age of 75, or at any point after the 30-day cool down period after you initially selected and set up your chosen annuity.

        Is there an annuity resale market?

        During 2017, there was some discussion among the government that, following the success of the 2015 Pension Freedom rules, it was considering opening up a kind of annuity resale market.

        The idea was that for people who had bought an annuity pension prior to the announcement may have the option of cashing in their annuities and switching to a different pension or retirement product.

        However, due to falling annuity rates and other complexities, this didn’t happen. That means that apart from some very specific circumstances and the rules of your annuity provider, it’s rarely possible to cash in an annuity at the time of writing.

        What type of retirement annuity pension lets you cash in?

        With regards to the type of retirement annuity you have, or are considering buying with your pension pot, the ability to cash it in doesn’t depend on the type of annuity pension you have or might want.

        If there is any way to change or cash in an existing retirement annuity, a qualified and experienced pension annuity advisor will be able to help. However, in most circumstances it’s not possible to cash in an annuity pension. That’s true whether your annuity is held with Prudential, Legal & General, or any other annuity provider.

        To gain more understanding of annuities and the possibility of cashing them in, speak with an annuity pension advisor. They understand everything about annuities, and can clear up any confusion regarding whether you can cash them in, and if you should try to cash in your annuity pension.

        Can I cash in a small annuity pension?

        If you are over 55 and have a small annuity that’s worth under £10,000, a loophole in annuity pensions rules suggests it may be possible to cash that small annuity in. However, while broad annuity rules might allow small annuities to be cashed in after they’ve been purchased, rules from each individual provider might mean that holders can’t cash in even a small annuity.

        With regards to adverts or companies who say they can help you cash in your retirement annuity, it’s advisable to be extremely cautious about such claims. Even if it’s possible that they can buy your annuity from you or help you cash it in, the interest charges or penalties of doing so could mean any payment you do receive after cashing in your annuity pension could be small and not enough to support you during your retirement.

        Can I cash in my annuity early?

        Again, due to the guaranteed element an annuity provides, it’s rarely possible to cash in your annuity early, or after you’ve begun to receive an income from it. Indeed, as already discussed in this article, it’s rarely possible to cash in your retirement annuity once you’ve purchased one and the 30-day cooling off period has passed.

        If you want to find out more about whether or not you can cash in your annuity, it can be useful to speak with an annuity pensions advisor. They can answer all your retirement annuity questions and help you make the right decision with regards to your pension, retirement income plans and existing annuity you already hold.

        What’s the difference between cashing in and cashing out an annuity?

        Cashing in your annuity is typically a British term that means selling your annuity and taking the money in it as a lump sum, or to move it into a different pension product. Meanwhile, cashing out an annuity is typically an American term.

        Essentially, both terms mean the same thing, only ‘cashing out an annuity’ is a term you would hear more commonly in the US than in the UK.

        Can I cash out my annuity pension?

        Because cashing out an annuity is the same as cashing in an annuity, the answer is also the same: in the majority of cases, you cannot cash out your retirement annuity pension early in the UK.

        If you have any questions about cashing in your retirement annuity pension, then it can be a good idea to speak with a pensions advisor. They can advise if you should cash out an annuity pension and, if it is the right way forward for your circumstances.

        How to cash out an annuity: Start by speaking to a pensions advisor

        If you have an existing annuity and are interested in cashing it in, or if you are considering buying an annuity but think you might want some flexibility around your pension in the future, then call us on 0808 189 0463 or make an enquiry here.

        If you are one of the few who can actually cash in your annuity, we can put you in touch with the right annuity pension advisor for your needs, who can answer all your questions and help you achieve your retirement goals.

        Once you’ve shared your details with our team, you can then just sit back and relax, while they  connect with you with one of the many experienced and qualified retirement annuity pension advisors we work with.

        Ask A Quick Question

        We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions Ask us a question and we'll get the best expert to help.

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        Tony Stevens

        Tony Stevens

        Finance Expert

        About the author

        Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.

        Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.

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