When the expense in your individual pension strategy reaches maturity when you retire, you’ll have to move its accumulated value in to a regular income for the remaining of one’s retirement. This is achieved through the purchase of an annuity – a simple and straight forward exchange that exchanges the final value of the pension fund into which you have been paying into a typical income.Whilst the theory of an annuity is seemingly very straight forward, however, things are seldom quite as simple because they seem.The first and possibly most important part of getting an annuity is that it’s a long-term, one-off commitment. You have only one shot at it, while there is no heading back and asking for a refund of all of the main city simply because, after the affair, you have found a better offer elsewhere. Quite simply, it’s very important that you make the right choice.Making the right decision is made no easier by the fact that an of different annuities all offer an of different annuity charges – i.e. can offer a different level of income for the same volume of pension investment.The problem is further compounded by the sheer number of different forms of annuity available these days.Standard annuity – the most conventional kind of annuity is one that pays you a fixed income throughout the rest of your life. The income is identified in advance, so you have the safety and satisfaction in once you understand the amount of that will be;With earnings annuity – while the title suggests, this applies the income you receive to an element of your originally invested sum that’s in turn invested again in shares, bonds and gilts. In this way, your annuity shows some of the risks inherent such investments;Unit-linked annuity – this is most likely the choice for those prepared to take the biggest risk on an annuity that is completely subject to the changes of the purchases made;Immediate (“temporary” or “purchased life”) annuity – this kind of annuity has to be purchased either from the cash component of your aged pension fund or some other cash resource. The benefit of this type of annuity is that aspect of the annuity is treated as a get back of your original capital and, thus, is not taxed, while the whole of your pension annuity would be susceptible to revenue tax;Impaired life annuity – this is a type of annuity intended for those whose actuarial life expectancy is leaner than someone of the same age in the general population. Different annuities will operate different descriptions of what amounts to “impairment” of life, however it is usually a question of an existing serious illness or lifestyle factors such as for example smoking, obesity or past occupation.SummaryThe relatively simple and self-explanatory question of converting the final price of a pension fund into a normal, income-paying annuity basically requires the form of advice you can best receive from an financial adviser, since:oYour pension annuity choice is of an one-off kind that you need to get right the first time;oThere is considerable difference in the level of income paid by any one annuity – naturally, you would want the best paying;oThere is really a wide selection of different kinds of annuity – some higher, some lower, risk – an financial adviser will manage to help you select the one you want.

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