​

Welcome to your guide on annuities, a financial product designed to provide you with a stable income during your retirement years. In simple terms, an annuity is a contract you make with an insurance company: you give them a lump sum of money, and they promise to pay you a certain amount regularly for the rest of your life or for a fixed period. 

What Does An Annuity Purchase Mean?

​

When you purchase an annuity, you are essentially buying a promise from an insurance company to provide you with a set income. This income is usually for life but can also be for a specific number of years. You make this purchase by giving the insurance company a lump sum, often sourced from your pension pot.

Key Features of Annuities

Guaranteed Income

The hallmark of an annuity is its guarantee to provide you with a steady income. This can be for your entire life or a fixed number of years, depending on the type of annuity you choose.

Types of Annuities

• Lifetime Annuities: These ensure you receive an income for the rest of your life.

• Fixed-Term Annuities: These provide income for a predetermined period.

• Enhanced Annuities: If you have a medical condition or lifestyle factor that could shorten your life expectancy, these annuities offer a higher income.

Customisable Features

​

You can personalise your annuity to include additional features like income for your spouse after your death, protection against inflation, or a guaranteed payment period even if you pass away shortly after the annuity starts.

One-Time Investment

​

Annuities are usually bought with a one-time payment, often from your pension savings.

Benefits of Using Annuities

Financial Security

​

The guaranteed income from an annuity provides peace of mind, ensuring you have a stable income during retirement.

Simplicity

​

Once your annuity is set up, it requires minimal management, freeing you from the stress of constantly monitoring your investments.
Flexibility

Annuities can be tailored to suit your individual needs, whether that's providing for a spouse, adjusting for inflation, or setting a fixed term for payments.

Age and Contribution Limits

​

• Age Limits: Annuities are generally available to individuals aged 55 and over.

• Contribution Limits: The lump sum used to buy an annuity usually comes from your pension pot, which has its own set of contribution limits.

Tax Rules in the United Kingdom

​

• Tax-Free Lump Sum: Before purchasing an annuity, you can usually take up to 25% of your pension pot as a tax-free lump sum.

• Income Tax: The income you receive from your annuity is subject to regular income tax.

Additional Considerations

​

• Irreversibility: Once you buy an annuity, you usually can't change your mind or adjust the terms.

• Inflation Risk: If you don't choose an inflation-protected option, the real value of your annuity payments could decrease over time.

• Costs: Adding extra features to your annuity can reduce the amount of income you'll receive, so it's crucial to understand the trade-offs.

Buying an Annuity in the United Kingdom

Annuities offer a secure and straightforward way to ensure you have a stable income during your retirement years. However, they are not a one-size-fits-all solution and come with their own set of pros and cons. Feel free to contact us for more information.

​

​

Unbiased Guidance and Independence

Our financial advisory firm is proudly independent, ensuring that our advice is free from any affiliations to specific products or providers. This independence guarantees objectivity, placing the focus squarely on what is best for you.

Holistic Financial Security

Protection Planning at Lionbridge Wealth goes beyond individual policies. We take a holistic approach to your financial security, considering your overall financial picture. This includes evaluating existing coverage, assessing risk factors, and creating a comprehensive strategy that aligns with your short-term and long-term financial goals.

Personalised Protection for Your Unique Needs

We recognise that everyone's financial situation is different. Our Protection Planning services at Lionbridge Wealth start with a deep understanding of your unique circumstances and goals.

Whether you're looking to protect your family, your business, or your own well-being, our personalised approach ensures that your protection plan is tailored to your specific needs.

Expert Guidance for Informed Decisions

Navigating the world of insurance and protection can be complex. Our team of experienced Independent Financial Advisors (IFAs) at Lionbridge Wealth is here to provide expert guidance, ensuring that you make informed decisions about your protection planning. From policy selection to understanding the fine print, we're your trusted partners every step of the way.