No one intends to work for the rest of their lives.
Eventually, there comes a time when you’ll have to step down from the office and give an opportunity for other people to put their skills to the test.
As you approach this age, the question that should linger in your mind should be how you’re going to spend your pension. You should do this in the best and most economical way possible. Because, believe me, even at 70, you might still have 30 more years on this earth.
A number of people prefer to purchase a pension annuity and while others may be quick to point out its cons, the benefits far outweigh them. With an annuity, depending on the type selected, you could get a guaranteed and steady income for life. So even if your initial investment was to end, you would still get the agreed-upon income amount.
Now the problem that troubles many people is finding the best provider. It’s always good to look beyond the enticing annuity rates offered by the providers. As you’ll be placing a huge amount of money in their care, for a long period of time, a solid history is a huge consideration.
You need to seek providers that have withstood the test of time. If you’re situated within the UK, then we’ve put together some of the best providers in the area.
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The Best Annuity Providers in the UK 2024
From our research, here are the best annuity providers in the UK:
Aviva
Aviva was founded following a merger between Norwich Union and the CGU insurance group.
Initially, the companies had decided on the name CGNU. However, in 2002, the stakeholders had it changed to Aviva plc. This is a nod to the Italian term viva which means “Long live”.
It has been nearly 2 decades since the name was crafted and still the company continues to epitomize the term through its growth and achievements.
Currently, Aviva is the largest insurance company in the UK. It has over 33 million customers worldwide and employs more than 31,000 employees in the UK. Its presence is felt beyond the UK as well particularly, in Canada, where it is considered the second biggest insurer in the country.
Moreover, this insurance company holds an 18% stake in the Savings market and a 10% stake in the General insurance market within the UK. On the face of it, this seems like a rather small percentage. But, if you were to consider the hundreds of insurance companies in the UK, both large and small, then this is actually a considerable stake in the industry.
Aviva provides a number of financial services. This includes fund management, general insurance, and life insurance among others. They also offer an assortment of annuities. Some of the common ones are immediate life annuity, pension annuity, and enhanced pension annuity.
Scottish Widows
Situated in Edinburgh, Scotland, Scottish Widows is a leading pension annuity provider in the UK. It was founded 2 centuries ago and has gone on to amass close to 6 million customers within the UK.
Now you must wonder, why the name Widows? Well, the name was derived from the primaeval objective of the company. This dates back to the year 1815 during the end of the Napoleonic wars.
There were a number of casualties during the war and many women lost their husbands while children remained fatherless. As a result, the company emerged to aid these people and thereby adopting the name Scottish Widows.
As the years went by, they expanded their services to include savings, life insurance, pension, investments, and annuity provision. They provide these services to not only widows but also anyone else in need of them.
Despite having a long history to back them up, Scottish Widows employs some clever advertising mechanisms to further their brand popularity. One of their most distinguishable mechanism is the legendary widow cloak which has been passed down from one model to another for 3 decades now.
Any lady who puts on the cape assumes the mantle of the widow and acts as the company’s brand or symbol for as long as she dons it. The first widow was Deborah Moore who later passed it to Amanda Lamb in 1994. In 2005, Hayley Hunt took over and held the role for almost a decade before passing it to the current widow Amber Martinez.
With Scottish Widows, you can opt for either a standard annuity or an enhanced annuity. They will also ensure you get the best annuity rates by doing a comparison with other annuity providers. This shows just how much they value their clients.
Hodge Lifetime
Hodge Lifetime, an auxiliary of Hodge Bank, was founded in 1965 under the name Hodge Life Assurance. For 55 years they have been providing retirement advice and plans to their clients. Their long-time experience in the field coupled with the dedication they have towards their customers has generated numerous awards for them.
In 2018, for example, they won the Mortgage Introducer award for Later Life Lender of the Year and the Mortgage Strategy Award for the Best Equity Realise/Lifetime Lender. These two are just a fraction of the awards they’ve earned over the years.
Aside from annuity services, Hodge Lifetime also provides equity release and retirement mortgage services. To qualify for an annuity with this provider, you have to be between 55 & 85 and a UK resident.
Hodge Lifetime is a financially stable pension annuity provider. They are licensed by the Financial Conduct Authority as well as the Prudential Regulatory Authority. In addition to this, they have a rating of B according to AKG. This signifies their financial strength.
When it comes to customer service, Hodge Lifetime has instituted steps to ensure you get the best out there. One of them is the collaboration with EQ paymaster. EQ paymaster has been in existence since 1845. Today, they have integrated annuity and pension payments into their model. Such a background guarantees you regular and timely payments for the rest of your life.
Canada Life
Canada Life was the earliest life insurance firm in Canada. It was established in 1847 by a banker named Hugh Cossart Baker in Hamilton, Ontario. But, it was not until 1849 that it became a fully-fledged company. This happened following the issuance of a charter of incorporation which enabled them to widen their operations.
Today, they offer a range of financial services. They include retirement plans, savings services, investing services, mortgages, and business insurance among others. Aside from Canada, this provider operates in the UK, the US, Germany, and Ireland.
In 2019 alone, this pension annuity provider has made more than $900 million in annuity payments to its customers and $2.5 billion to assist families facing the misfortune of the loss of a loved one. Canada Life adores their customers and are relentless in their pursuit of customer satisfaction. Their advisory services are out of this world and structured to give customers only the best information and guidance.
For decades, the firm has been serving its customers as 3 companies; the Great-West Life, London Life, and Canada Life. However, as of 1st January 2020, as part of their re-branding process, all these companies were amalgamated into Canada Life Assurance Company.
The annuity types issued by the company include a single-life annuity, where you can get guaranteed income for life but is limited to a single person; a joint annuity, where you can receive guaranteed income for you and your spouse throughout the course of your lives; and finally, a term annuity where you receive income for a predetermined number of years.
Legal & General
Stationed in London, England, Legal & General is among the pension annuity providers that have existed for more than a century. Over the years, they have accumulated more than 7 million customers and have become one of the best life insurers in the UK.
At the beginning of 2020, Legal & General insurance was sold to Allianz Insurance. This means that while this annuity provider still offers a variety of services, it is limited to life insurance, investments, retirement services, and mortgages. Its general insurance services are being provided under the name Fairmead Insurance.
In 2018, Legal & General appeared alongside the largest insurance companies in the world with total assets worth $625.7 billion. In 2019 as per the number of customers, Legal & General was also ranked among the top life insurance companies. As a matter of fact, it was only second to Aviva life insurance.
How Much Will 100k Annuity Pay per Month in the UK?
The amount of income you receive monthly or yearly from your annuity will vary depending on a number of factors. The 3 most usual ones are age, gender, and annuity rates. We will explore more later on, but for this specific query, we will use the factors stated above.
With a £100,000 pension, you are likely to receive an annual income of between £3000 and £6000. To better understand how the estimate was arrived upon, we’ll have to get down to the nitty-gritty.
We’re going to do this in 3 sections.
- Single life pension annuity for a 55-year-old – At 55, you’re still quite young and annuity providers tend to believe you will continue to live longer, for that reason, you might be paid less. On average your monthly income may be £290 which is about £3500 annually. You should also remember that you are normally granted the right to take a 25% non-taxable lump sum from your pension. If you opt to do so, you’ll be left with £75,000. It is important to consider this as it will impact your payments.
- Single life pension annuity for a 60-year-old – If you decide to delay your income till you’re 60, then you will receive better annuity rates. At this age, you can expect £330 monthly which is an annual income of about £4000.
- Single life pension annuity for a 60-year-old smoker – Annuity providers will, more often than not, require you to disclose your smoking and drinking habits. Frequent smoking and intake of alcohol severely impact your health condition and this in turn lowers your life expectancy. For that reason, annuity providers tend to offer enhanced annuities to such people. If you’re in this category, then your income will differ from someone with a similar age who neither drinks nor smokes. You can expect around £375 monthly income which totals up to £4,500 per year.
What Factors May Affect My 100k Annuity?
Annuity rates. A number of people disregard the fact that annuity rates are adjustable. This means that your pension provider can change them due to factors such as inflation. The financial conduct authority advises people to explore a variety of pension providers before selecting the provider they deem appropriate. This is following their research which concluded that 80% of people buying annuities could have found better terms had they scouted around for more deals.
Age. A person who retires at 70 is likely to get a higher annuity income compared to one who retires at 60. The more you delay your payments, the more annuity income you will receive in the future.
Gender. According to research, women have a higher life expectancy as compared to men. This is a factor considered by a number of annuity providers. As a result, you might find varying annuity rates between men and women. Generally, women are paid lesser pension annuities compared to men.
Your health condition. If you have a health condition say diabetes, asthma, or hypertension, then you could get a higher annuity income because your life expectancy is lower. Generally, pension annuity providers offer higher annuity rates for people with health issues. This applies in a joint annuity as well, where one partner has a health issue.
Your annuity type. There is a vast array of pension annuity for you to select from. Each of them is structured differently to suit your needs. Some of the most common ones include single-life annuity, joint-life annuity, fixed-term annuity, guaranteed period annuity, and enhanced annuity.