Pensions from Newcastle Independent Financial Advisers

Amethyst IFA

83 Howard Street
North Shields
Tyne and Wear  NE30 1AF

0191 257 6704 0191 257 6256 Mon - Thurs 9am to 5pm
Friday - 9am to 4:30pm


What is an annuity?

An annuity is a contract between an insurance company and a pension scheme member in which an insurance company provides a regular income in exchange for a lump sum.

The amount that you are paid as part of your regular income is dependent on the insurer's estimation of how long you will live, the annuity rates, and the amount of your pension fund.

What are the advantages?

  • Provision of a regular income upon retirement
  • Choice of annuities available to suit your needs - Joint life annuities available
  • Income paid at intervals to meet your needs

The advantages and benefits will depend upon the type of annuity you select. We are here to assist and to ensure that you get the one that best meets your needs and circumstances.

What are the disadvantages?

  • When you buy an annuity, the insurance company works out your normal life expectancy and uses this calculation to decide the level of income it will pay you. The longer you that you are expected to live, the lower this income will be and the shorter you are expected to live the higher this income will be. Although most people will die roughly when expected, there ate those who will live longer and shorter lives than expected. In simple terms, those who die earlier than expected pay for those who live longer than expected, this is known as Mortality Cross Subsidy.
  • Falling annuity rates could reduce the amount that you receive from your pension
  • Not very flexible, and unless you have selected a flexible scheme, you could be tied to the policy

The disadvantages will also depend upon the type of annuity you select. We are here to assist and to ensure that you get the one that best meets your needs and circumstances.

Important note

If you do decide to buy an annuity upon retirement, you should ensure that you check policies, rates, restrictions, and benefits very carefully, and if necessary seek advice from an independent financial adviser. Investing in the wrong annuity scheme could cost you a great deal in annual income, so make sure that you look into this subject carefully before you make any commitment.

A pension is a long term investment. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

The value of your investment and income from it is not guaranteed it can go down as well as up due to fluctuations in investment markets, and you may not get back the full amount invested.

Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor.

The Financial Conduct Authority does not regulate taxation advice. We are entered on the Financial Services register No 623925

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amethyst IFA Paul Richardson Alan Dennett Malcolm Butters Liz MacBride Keith Wilkinson Stephen Anderson Karen Chapman