Buy Annuity Early

Buy Annuity Early

Research from Defaqto suggests buying an annuity sooner rather than later could have more impact than selecting a provider.  Principal consultant on wealth and pensions management for Defaqto, Matt Ward said “Buying early will secure current rates and reduces risk of any future reduction in the bank base rate.  As well as securing a rate, it will also provide an income that would take many years to replace if the annuity is taken later”.

A 65 year old man in good health with no spouse’s income and a pension fund of £100,000 could be £376 better off than if he took an annuity at 64.  However, he would have forefeited by not taking his annuity a year earlier and would have to survive 41 years to make up the difference.

Our view

We suggest you contact us for professional advice in connection with annuity purchase.  There are plus and minus points for buying or deferring an annuity such as income tax, tax free cash sums and loss of means tested benefits.

There are even special annuities for smokers or people with illnesses called enhanced annuities

For some people they may be better off to buy an annuity early, for others they may be better off deferring.  This will be based upon your personal circumstances.

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