Look before you leap Changes in annuity rates mean more people will be shopping around, says Pamela Atherton

• Published in: Sunday telegraph (London, England)
• Main Author: Atherton, Pamela
• Format: Newspaper Article
• Language: English
• Published: London (UK) Daily Telegraph 08.09.2002
• ISSN: 0307-269X

Insurance companies responsible for managing personal pension policies must now provide customers with much more information about their retirement options. All policyholders must be explicitly told that they have the right to trawl the pension market for the most suitable annuity rather than simply accepting the annuity offered by their pension plan provider. Retirement annuity contracts are also governed by different rules from personal pensions when it comes to taking tax-free cash. People with personal pensions can take up to 25 per cent of the fund in the form of a lump sum. But the maximum lump sum available to those with retirement annuities is based on a multiple of three times their annual annuity. That same 65-year-old with the same amount - pounds 100,000 - in a retirement annuity buying roughly the same annuity ( pounds 6,452 a year) would be restricted to a maximum tax-free lump sum of just pounds 19,356 - three times the annual annuity.