A pension annuity is also known as a “final pension salary”. There are several different types of annuity available to purchase depending upon the pension holder’s individual circumstances.
An annuity provides a regular fixed income to you from the date of your retirement (or retirement age) which is guaranteed until the date of your death. Some annuities can be fixed for a specific number of years.
Why have an annuity?
A pension annuity can help to provide certainty of income for the future, post retirement. This can assist with paying regular monthly bills that the pension holder may continue to be responsible for, such as mortgage/rental payments over their home, as well as ongoing utility bills.
How could you be mis-sold an Annuity?
The main area where a mis-sale of an annuity could take place is whether you were advised by your pension adviser over any pre-existing medical conditions and if the adviser shopped around different pension annuities for the best final salary based upon those medical conditions.
For example, if you have high blood pressure or any other underlying health conditions, then your annuity paid to you post retirement should be higher as you would have a lower anticipated life expectancy than a healthy person who does not have high blood pressure and does not smoke.
In this type of situation, you would expect to see your pension annuity provider topping up your income from the annuity to factor in the likelihood that you will die sooner than somebody without a medical condition. This did not always happen.
Unfortunately, not all advisers did shop around for the best salary, which would have assisted greatly in identifying the correct annuity for the client.
This is being looked into much more closely now by the Financial Conduct Authority (FCA) who are undertaking their own investigations into this area.
What is good about an Annuity?
An annuity provides a fixed income to you post retirement until the date of your death, much like a regular wage would have whilst you were continuing to work. A pension annuity provides much more financial certainty for you upon retirement.
After retirement, you are likely to continue to have regular outgoings. Even if you no longer have a mortgage or rent to pay each month, an annuity will provide an income to you to assist with those regular outgoings, whether it be utility bills in your home, payments towards additional care for you or your loved-ones or any other financial commitments you may still have after retirement.
How do you know if your Annuity was mis-sold?
If you are worried about any of the advice you were given, or not given, by your pension provider or adviser or you feel that your adviser did not shop around sufficiently regarding your pension annuity, then it is worth getting the advice you received checked out independently.
Should you wish us to, we would be happy to assist you with this under our “no win, no fee” scheme.
Should we be successful, our fees are 20% plus VAT which is equivalent to 24% in total.