Pension Annuity Rates Calculator – How It Works
Pension Annuity Rates Calculator
In order to find the best pension annuity rates, you need to use your Open Market Option.
This means that you will have to shop around the market in search of various annuity products and providers instead of just availing of the annuity your pension provider is offering.
While your pension provider may have done a great job managing your pension funds, it may not be as much of an expert in dealing with annuities. Also, by shopping around, you will find more types of annuities, some of which offer much higher rates than the standard annuity your pension provider is offering.
As you shop around for pension annuities, one of the tools you will come across is the pension annuity rates calculator. There are different types of calculators available, though most of them are designed to provide you with:
1) a list of pension annuity providers who are offering the type of annuity that you are looking for; and
2) your projected monthly and annual annuity rates.
In order to get this information, you have to submit some of your own information first in the pension annuity rates calculator. This is because annuity rates vary depending on personal circumstances.
Usually, you will be asked to provide your:
- gender
- age or date of birth
- the size of your pension fund
- your address or postcode
- the age of your spouse, if you are considering a joint-life annuity
The reason why these details are required is because each of these can have an effect on your rates. For example, gender and age are major factors in calculating life expectancy, which in turn, is very important in calculating annuity rates, since the longer you are expected to live, the lower rates you will usually get.
Annuity rates can also vary per area, and if you decide to opt for a joint-life annuity and include your spouse in your retirement income, you will get lower rates since the annuity will be divided among the two of you.
Sometimes, a pension annuity rates calculator will even ask if you smoke or if you are suffering from a medical condition. If you tick ‘yes’ to either, you will receive a list of enhanced annuity rates, which are up to 40% higher than standard annuity rates, since there is a chance you might qualify for these.
In order to better understand how pension annuity rates are calculated and to know which providers you can trust, it is recommended that you ask for advice from a financial expert.
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