Shop around and compare providers

You don’t have to choose a pension option, eg a guaranteed income (annuity) from your current pension provider. You can switch your provider before taking your money.

For example, if you want to buy an annuity, moving to another provider could give you a bigger choice and potentially a higher income.

You can shop around by yourself or with help from a financial adviser.

When shopping around watch out for pension scams.

Your current provider

The ‘wake-up’ pack your provider sends you when you reach your ‘selected retirement age’ (the age your agreed to retire) will probably only contain information on the products they offer.

Research shows that 8 out of 10 people would have benefited from switching providers (Financial Conduct Authority, Thematic Review of Annuities, Feb 2014).

Guaranteed income (annuity)

You can shop around for annuity quotes from other pension providers. They’ll tell you how much you might get each month or year based on things like the amount in your pot and your age and health.

Before looking at other providers you need to check with your current one:

  • if your pot has a guaranteed annuity rate – this could mean you get a better deal by staying
  • if they’ll charge you a fee for moving your pot to another provider

There are many different types of annuity. You can compare them on the Money Advice Service website. You’ll need to know:

  • how much you have in your pot
  • the age you plan to retire
  • the postcode of where you’ll live when you retire
  • the type of annuity you want, eg one that only pays income for a fixed term

You’ll need to answer questions about your health and lifestyle.

Once you’ve bought an annuity you only have a short period when you can still change your mind (in most cases 30 days). You could speak to a financial adviser to help you compare or discuss annuities that you’ve found.

Always ask providers if your annuity quote includes commission fees.

If you have a health condition that affects your life expectancy you may get more from an ‘enhanced’ annuity.

Adjustable income (flexi-access drawdown)

You’ll need some knowledge of investing if you want to compare adjustable income investments or you could ask a financial adviser to help you.

An adviser might be able to tell you how much your pot could grow and how long it would last if you took a certain amount every year.

If you get an adjustable income you’ll need to be involved in decisions about which funds and markets to invest in and regularly review them to make sure your money lasts and keeps up with or beats the rate of inflation.

You’ll also need to:

  • understand investment terms and choices
  • check what fees you’ll pay for your investment to be managed
  • know how your pension pot will be taxed each time you take money out of it
  • be aware that if your investments don’t perform well and you take too much from your pot, you could run out of retirement income