More about pensions....

As mentioned above there are broadly two categories for pensions. If you are lucky enough to have benefited from a final salary pension, then there is less to consider with your finances. This is because your emplyer will guarantee an annual income for the rest of your life, based on the salary you got while you were employed. If you have been with your employer for a long period of time and/or have risen to a high salary while you were in work then your pension income will be higher than someone on a lesser salary.

If however you are one of the majority of retirees who do not have the luxury of a final salary pension and have built up a fund using a defined contributions scheme, then you will have the decision to make about how best to invest your pension fund. There are a number of choices on offer, but most reetirees opt to buy an annuity. Annuities can be bought in exchange for your pension fund; usually 25% can be withdrawan tax free immediately, with the rest of the money being paid out to you as an annual income for the rest of your life.

The amount you will recieve from an annuity will depend on a number of factors. The annuity company needs to calculate how long you are likely to live for, so they will look at your health, lifestyle, age and location to make a judgement on how many years you will live. They then offer you a rate for your annuity based on this information. There are many types of annuities to suit many different circumstances, too much to discuss here. For more help speakk to an IFA or an annuity specialist. Beware though, IFA's charge, so do some research yourself before deciding whether you want to pay to see one.