What is an FSA Annuity?

Luckily for consumers, the United Kingdom has its very own watchdog when it comes to regulating the financial services industry. The Financial Services Authority, or FSA, functions as a kind of judicial body that regulates the industry to help safeguard consumers from scams, misleading information, or other missteps that can take place when investing in retirement funds. The FSA is funded through fees that are charged to the financial services industry and works to maintain acceptable practices in a variety of different subcategories in the industry. One of these, and perhaps the most crucial for many consumers, is in dealing with investments and investment practices.

Through the use of the FSA, consumers are able to maintain their confidence in the financial system. This can mean that more consumers are able to invest, knowing that they are protected in some way. Because of this, the FSA has become an integral part of the financial system in the UK. Because of their existence and steadfast critique and regulation of the financial services industry, more consumers and investors are free to invest in their retirement, as well as other prospects, while also feeling safe and supported.

For those looking toward ensuring their financial stability and security, there are several investment strategies that are governed by the FSA. One of the most popular of these in today’s market is an FSA annuity. Because annuities are quickly becoming an integral part of any financial portfolio, the backing of an FSA annuity has become increasingly important and crucial to the investment strategies of consumers.

If a consumer is interested in purchasing an annuity, there are several reasons to choose one that is governed by an FSA provider. When a consumer shops around for an annuity, they are given extra support and confidence when investing in a provider that is backed and supported by the FSA. Because the FSA is always working to ensure that the consumer gets a fair deal, the consumer and investor is far more protected when investing in an FSA annuity. The markets are forced to provide competitive rates and annuities, given that the FSA promotes competition in the open market. This helps to enable consumers to find the best FSA annuities.

While annuities are an important factor in any retirement strategy and portfolio, they are only so good as the research and time put in to finding the right one. For many, the right annuity is an FSA annuity. That is because the FSA works to sustain fair market strategies and competition to help ensure that the consumer always gets a fair deal.

What are the Pros and Cons of Buying an Annuity?

Annuities have become a very popular option in retirement portfolios, especially as of late. Of course with any investment strategy, there is a great deal of research that should go in to making any financial decision. This is especially true of annuities, which serve to help consumers enjoy their retirement years in financially stable and secure manner.

Like most investments, there are both pros and cons to buying an annuity . For each individual situation and case, there are several specific and unique options to consider. However, there are also some general guidelines that help outline the pros and cons to investing in an annuity as an income source during retirement.

For many, an annuity offers an option that does not include having to risk losing a portion of retirement savings. This can be very attractive for many consumers. There are a variety of other benefits to investing in an annuity as well.

Pros
Annuities offer an option for lifetime income. Consumers who invest in an annuity are guaranteed periodic payments for as long as they are alive. The risk that a consumer will live past their expected life span is the sole responsibility of the insurer supplying the annuity. There are also several protections to investing in an annuity. For example, an annuity can protect against inflation in that it ensures that the monthly paycheck received will keep pace with the current cost of living. This can be a huge benefit for consumers. Annuities can also protect the principal invested. For fixed and equity indexed annuities, the value of the investment is always guaranteed to at least be at or above the amount that was originally invested.

Cons
Despite the many benefits to purchasing an annuity, there are some downsides as well. The first of this is that every annuity is different and therefore requires a great deal of research and effort before investing. Some annuities, such as fixed annuities, are often a safer investment than some other annuity products currently on the market. Secondly, annuities often offer lower returns on investment for the investor. Annuities do not fluctuate in value in the same way that some other investments, such as stocks, do. This means that while the income is guaranteed it is not going to ever be a bigger return on investment. Lastly, annuities are known for being inflexible. The consumer does not have easy access to the lump sum of money invested. Rather, the investor is really tied to the contract made with the insurer.

For many, an annuity is the best retirement option. While there are several pros to investing in annuities, like any other investment strategy, they require a great deal of research to ensure that they are the right fit for the consumer in question.

Is an Annuity Pension Right for Me?

Approaching retirement can be a difficult time in anyone’s life. After working and saving for years and years, you are now expected to give up your job and retire, and somehow live on the money that you have saved. If you have a final salary scheme with your employer then you will not need to consider an annuity pension, if however you do not then an annuity pension can be a relatively low cost way to make sure that you are financially stable throughout the rest of your life.

An annuity pension works in quite a simple way. When you retire you take the money you have saved and with it you buy an annuity pension. This annuity means that you are guaranteed a regular income for the rest of your life, no matter how long or short that might be. If you have a pension scheme and you want the financial security of an income at the end of the month then an annuity pension may very well be the right thing for you.

With the money that you give the annuity provider they will in turn buy gilts and bonds, and the return from that investment is what gives you your regular income. For some an annuity pension can be a necessary tool in managing finances and making sure that there is money coming in on a regular basis. However, with annuity rates at the lowest they have ever been an annuity pension is not the lifeline that it once was. At the moment if a man of 65 were to buy an annuity with £50,000, he would only be getting a return of about 6%. This means that with his average life expectancy of 17 years, at the end of that period, he would basically have just got his money back.

The truth is that a pension annuity is not what it once was, and the annuities rates have made many people think long and hard about the possibility of an annuity. However, if you need financial security and a low risk investment, then buying an annuity might be the right thing for you to do. Some people may have the luxury of waiting for the Eurozone and various other factors to stabilise, but that is not true of everyone, and if you need the income then an annuity pension might be your lifeline.

Buying an Annuity: What to Expect

When you are about to buy an annuity it is very important to know what is out there and what you can expect. You will no doubt be asking yourself if you will have enough money to get you through retirement, and this question is becoming all the more anxiety ridden as financial markets fluctuate and make investments more and more uncertain. There are a number of investment options open to you when you retire, and buying an annuity is but one of these options. If and when you decide to buy an annuity you will be asked to take the sum of your pension and exchange it for an annuity, or put another way, you will buy an annuity.

You are entitled to take as much as 25% of your pension fund as a tax-free lump sum to do with as you wish. This is commonly used to pay off outstanding debts, pay off the mortgage, or even take a holiday. The rest of the money however will be put into buying an annuity of some kind in order to make sure that you get through your retirement will relative financial ease. Once you have done the necessary research and decided on what annuity you want to buy you will then transfer the money and decide on a date for your first income.

Buying an annuity, as with most investments, is also an issue of timing. While it may not be an option to wait when buying an annuity, it is also important to acknowledge that annuity rates are at the lowest they have ever been which means you will be getting less income than you would have a couple of years ago. Unfortunately it seems that it will take a couple of years for this to change so for most people waiting isn’t an option. That being said, once you have completed buying an annuity, you will then receive a regular income from that annuity.

In some cases you can decide what you would like the regular intervals to be. You can choose to receive the income on a monthly basis, which is most common or quarterly, bi annually or annually. This is but one of the many choices you will have to make about buying an annuity. Each of these small decisions will contribute to how your money is managed and how much regular income you get. All the small decisions will amount to big decisions but if you know what to expect, and what your choices will mean there should be no unwelcome surprises.

Annuities: Poor Deal or Valuable Financial Product?

Annuities can often seem a bit daunting, and for a very good reason. In exchange for your pension you will receive a guaranteed regular income, but it still requires you to hand over your whole pension and sometimes some of your extra savings too. And this would logically, make anyone nervous. You have worked for years to save enough to get you through your retirement, and now you are just expected to hand it over. This is what makes annuities a scary word, and it has become a bit scarier in the last few years as annuities rates have dropped.

Annuities rates are what determine the income you will get, and these rates do change. With annuities rates at the lowest they have ever been, people who buy them are simply not able to get the income that they once would have. For example a male, aged 65: if he bought an annuity now for £50,000, he would only be getting just over £3,000 a year. This is not a large sum of money and is enough to make even those who are not scared of annuities a wee bit nervous.

So, there is a part of annuities that are a risk and this is what makes people anxious about them, but there are positives to annuities. With an annuity you are guaranteed a regular income and this can be a valuable tool in managing your finances. The risk that you are taking by buying an annuity is comparatively low, compared to other investments that you could be making; unless, you opt for an annuity which is linked to the stock market. You can choose to have an inflation linked annuity. Annuities of this kind will increase over time as inflation increases. This is extremely helpful as your income will increase as living expenses rise.

In addition, if you suffer from ill health then you can also apply for an enhanced or impaired annuity. Annuities like this are available for people whose life expectancy is not as long and so you will receive a higher income. With all of these options to choose from you really can make the most out of annuities and do the best to make sure that they work for you. In this way you can turn annuities into something beneficial to you, rather than something that scares you to death.

Will an Annuity Help to Get Your Finances in Order?

There are simple but important things that you can do to make your retirement better and to manage your retirement finances in a way that benefits you in the long term. The very first thing to do when you approach retirement age is to educate yourself as fully as possible about the choices and possibilities that you have before you. Just by doing a bit of homework you can avoid the mistakes that take people into an unpleasant and stressful retirement. For example, annuities can be a very useful way to manage your finances, but in order for this to be true, you must do some research and find the right annuity provider.

The key mistake that so many people make is that they just accept whatever annuity option they are being offered by their normal insurer. This is not the right thing to do. You have no idea what options are out there, or how the option you have chosen compares to what is available. You are under no obligation to accept the offer from your current insurance company, or an offer from your pension provider. You are about to invest money that you have been saving for your whole working life – you have to shop around, especially since once you have exchanged your pension funds for an annuity you cannot get any of it back.

There are a number of decisions that you will have to make regarding your annuity. The first thing to consider is timing. At the moment, annuity rates are as low as they have been, you may be hesitant to buy an annuity, even though you may not have the luxury of waiting. While some have predicted an increase in annuity rates, this is not a certainty and while you wait, you are losing income. It is a difficult decision to make, but it is one that you will have to take, perhaps with the help of a financial adviser who is qualified under RDR.

The second thing to consider is what type of annuity will be best for you and the only way to figure this out is to find out about the variety of annuity options that are available on the market. The two key annuities are guaranteed annuities, which pays you an agreed upon fixed income, or an index linked annuity. This kind of annuity will fluctuate according to the stock market and is therefore less stable. There are other choices that you will need to make, but the key is to know your options.

Lifetime Annuities In Practice

Anyone 55 years of age or older that has been saving into a pension, needs to decide when the right time is to take money into retirement and also what is the best way to do that. The decision that you make at this stage will determine your financial stability for the rest of your life, so it is paramount that you make an informed decision, and lifetime annuities are one of the options. For the most part, pension schemes permit you to take as much as 25% of the lump sum as a tax-free payment; this is yours to spend as you will. Some people have used this money to clear debts or make a final payment on the mortgage. You can also invest it.

You have the option to take none of it or a smaller proportion. The choice is yours. The rest of the pension fund can then be used to set you up for the rest of your life, hence the name lifetime annuities. Lifetime annuities or annuities are basically an investment and an exchange. Upon retirement you exchange the capital in your pension fund, and perhaps an additional contribution, for an annuity. Lifetime annuities of this kind will then pay you an income for the rest of your life.

The income is usually received on a monthly basis. There are a number of different kinds of lifetime annuities that you can choose from, and it is up to you to find the best option for you. For example there are lifetime annuities that take inflation into account, so that your income will rise, as inflation rises. There are also annuities which do not take inflation into consideration and this means that you will receive the same sum each month.

A lifetime annuity can be an excellent way to manage your finances once you have retired. Having the security of knowing that some money is coming in at the end of the month can be a huge relief. There are many annuity providers, and many options from each of those providers, which means that you really need to do the research to find not only the best annuity provider, but also the best lifetime annuity that will serve you in the best way. It is quite literally an investment in your future.

Annuity Prices: What to Expect?

If you are approaching retirement age, then you will no doubt have been looking at the falling annuity rates with horror and trepidation, and this is completely understandable. However, it really is not all bad news. Let’s get the bad news out of the way first. Annuity prices have dropped by 14% since 2009, and by about 2% since March of this year. What these numbers mean in reality is that if you are single, a male of 65 years, you would get an income of just over £3,000 for an annuity price of £50000. In 2009 that number would have been closer to £4,000, and would increase the further you go back.

On the whole, the income that you get from an annuity has fallen, but the big drop that has happened in the last couple of years can be attributed to two main things. Firstly the EU has ruled that paying men a higher annuity, regardless of the fact that they generally live for a shorter period, is not to be permitted. In all likelihood this will mean that women’s annuity prices will remain pretty much the same, while men’s annuity prices will fall.

The second factor is Solvency 2 which will force providers of annuities to make less risky decisions regarding their portfolios. This will all mean that annuity rates will fall, even though life expectancy is on the rise.

Done with the bad news, now here is the good: while annuity prices and rates will probably continue to drop over the next couple of years, maybe two or three, they will rise again. Logically there is also a floor to how low annuity prices can go, where you are simply getting the payment that you put in.

Annuity prices are connected to the cost of the United Kingdom government gilts or bonds. So when you purchase an annuity, at whatever annuity price, your annuity provider takes your pension and then uses that to buy gilts and it is the income from the gilts that in fact pays for your income. Logically then if the gilt is expensive, the income will be smaller relative to how much it cost. So while annuity prices may fall a little bit in coming years, there is an up-turn on the cards that has been predicted.

Is an Annuity Right for You?

If you are approaching retirement age, you will have started thinking about the prospect of an annuity. An annuity is essentially an insurance product that you use your pension fund to buy; in most cases you will exchange the lump sum of your pension for an annuity. You can take 25% of the capital of your pension as a once-off tax-free lump sum, but the rest must be exchanged for an annuity. In exchange for the money from your pension you will receive an income for the rest of your life. This means that even though you are not employed, you will still have a regular income coming in.

This guaranteed income is a way of managing your money and making sure that you will have enough to live on. Usually you would receive the income from your annuity on a monthly basis, and this sum is taxed. Once you have taken an annuity you cannot change it, so it is vital that you decide which annuity is best for you, but also which annuity provider is best for you.

The factors that are taken into consideration when calculating your annuity are your gender and age, whether you smoke or have elevated cholesterol, whether you  are overweight or if you have any life-threatening illnesses or conditions. In this way an annuity will best serve the time you have left. There are also different kinds of annuities and you will need to find the one that is the best option for you. But before this is it necessary to decide if an annuity, in general, is what you need.

And here there are a couple of things to consider. One of the biggest benefits of an annuity is that you are guaranteed an income for the rest of your life. This is of course a huge weight off your shoulders; just knowing that you have that security of an income at the end of the month could be enough. It is also a good idea, since in many ways it is an investment and a common way to manage money.

On the one hand you can get an annuity that takes inflation into consideration, though your earlier payments will then be lower, or on the other hand you can get annuities where the income remains constant despite inflation. There are many, many angles to consider when buying an annuity, but it could give you peace of mind for the rest of your life.

Save Money with an Annuity Drawdown Plan

An annuity is a contract with an insurance company whereby the company guarantees regular income in exchange for a capital sum from a contribution pension scheme. It offers a secure, stable and steady source of income for pensioners. But for those who do not want a secured pension, an annuity drawdown can be an effective way to save money and optimise the pension fund. It can suit people who have a sufficiently large pension fund and can afford to keep it invested while drawing down income as and when needed. Annuity drawdown allows you to make withdrawals from your pension fund as and when you may need them. At the same time your pension fund can remain invested and you can continue to reap the benefits of any growth and returns on investment. Annuity drawdown is therefore a good way to maximise the benefits of your pension pot and make the most out of it.

There are no limits on the minimum amount that can be withdrawn through an annuity drawdown scheme. As such, you can withdraw any amount of income as and when needed, or leave your pension fund untouched and intact for the rest of your life. The maximum amount that can be withdrawn through an annuity drawdown scheme is the full amount that a person of the same sex and age could get from a purchase from a single life annuity based on the current Government’s Actuary Department’s (GAD) rates. The amount can be withdrawn as a tax free lump sum after the age of 75 if it has been left intact until then.

While fixed annuities let you lock into current annuity rates at the time of purchase, leaving your pension pot invested involves taking a risk. However, given that annuity rates are at an all-time low and expected to continue in that direction, annuity drawdown can help you reap the benefit of investment while also being able to access your pension fund when needed.

Having an annuity drawdown in place does not exclude the possibility of also investing in a conventional annuity. The trick to saving money using annuity drawdown and secure pensions is to mix and match different product to suit your lifestyle. For instance, investing a portion of your pension fund into an annuity to cover daily expenses, and having a flexible drawdown option can help you make the best of both worlds.