What happens to my pension when I die if I have an annuity?

This is a question we are often asked at Enable Independent, knowing the facts early on will enable you to make the best decisions regarding your personal pension.

How your pension is dealt with depends on how you use it when you reach retirement, whether you need a secure income, an annuity, or if you prefer a more flexible, more unreliable income, known as an income drawdown.

So what is an annuity?

An annuity is a secure, regular taxable income purchased from and insurance company in exchange for your pension fund. The annuity will be paid for the rest of your life, providing you and your family with security. However annuities are fixed, and they cannot be changed or altered once they have been put into place, to it is imperative to really understand what you will be getting, and to make sure you choose and IFA not a bank who will be able to offer you the best type of annuity available.

When you set up your annuity you will be able to choose if you wish for any of your pension to be paid after your death. If you choose a joint life annuity you will be able to choose how much income they will need after you die. You can select a guarantee period of up to 10 years, and this will be paid to your partner or spouse even if you die early.

If you add your spouse or partner to your annuity, you can do so for free, with it costing an average of 9.1% more to provide a spouse’s pension annuity paying 50% of your income this would make financial sense. However with all types of insurance policies you must always declare health problems or existing medical conditions before entering into any policy.

If you need any further information regarding this article then please do not hesitate to get in touch with our team of IFAs. 

What is a income drawdown?

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.