OLD MUTUAL ANNUITY GUIDE
HELPING YOU WITH YOUR ANNUITY DECISION WHEN YOU REACH RETIREMENT
IMPORTANT NOTE: This guide is NOT financial or investment advice. It is intended to help you understand the differences between the main at-retirement annuities, so you can make an informed decision about which one is best for you in consultation with your financial adviser.
WHAT IS AN AT-RETIREMENT ANNUITY?
An at-retirement annuity is a way for you to make sure you receive a steady stream of income (pension) after you retire. The amount of income depends on various factors, including how much you have saved in your retirement fund and the annuity you purchase.
THE TWO MAIN TYPES OF AT-RETIREMENT ANNUITIES
- Guaranteed (Life) Annuity – pays you a guaranteed monthly income for the rest of your life. You may receive a yearly pension increase depending on the type of guaranteed annuity (or increase profile) and the investment market performance.
- Living Annuity – Allows you to choose where your retirement savings are invested and how much you receive as an income (within limits). There are no guarantees, so your money could run out.
WHAT SHOULD YOU CONSIDER?
The table below will help you discover which type of annuity (Guaranteed or Living) may be best suited for you. Remember that choosing an annuity is a very personal decision. So, while your responses can help you figure out which annuity might meet most of your needs, you should speak to a financial adviser before making any decisions.
- Answer each of the questions by putting a tick in the YES or NO box.
- Once you have answered all the questions, add up how many ticks you have in each of the colours. Then read the explanation for the colour with the most ticks in it.
It is important to me that I receive my pension until I pass away, without having to do anything myself to make sure it does. It is important to me that my retirement income is protected against inflation. I need my retirement income to be protected against poor market performance without having to manage it myself. I want my pension to have a good chance of increasing every year without me having to make any changes to my investment. I want control over where/how my retirement savings are invested. If I pass away, it is important to me that what is left of my retirement investment gets paid to my spouse or children. It is important to me that I have the option to change my annuity in the future if I want to.
Now add up the total number of ticks you put in each of the colours.
ticks in blue boxes. ticks in pink boxes.
HERE’S WHAT YOUR ANSWERS SUGGEST ABOUT THE TYPE OF ANNUITY THAT MAY BE RIGHT FOR YOU:
IF MOST OF YOUR TICKS ARE IN BLUE BLOCKS A Guaranteed (Life) Annuity might be the most appropriate solution for your needs and preferences.
• Guaranteed income for your life
• The possibility of yearly pension increases
• Extra cover options for a spouse or partner
It doesn’t offer:
• A lump sum death benefit. You can however cover a second person or choose a minimum guaranteed period (up to 25 years) during which time your beneficiaries will continue to receive income payments of you pass away.
Speak to your Retirement Benefits Counsellor about your annuity decision and to find out more about
Old Mutual’s options.
IF MOST OF YOUR TICKS ARE IN PINK BLOCKS A Living Annuity might be the most appropriate solution for your needs and preferences.
• Control over where you invest
• A choice of income (as a % of your retirement savings)
• A death benefit
It doesn’t offer:
• A guaranteed income for life
• Automatic pension increases
It is important to note that in purchasing a Living Annuity you are responsible for making your money last, this means ensuring your drawdown rates are sustainable over time. Old Mutual will assist and provide you with a sustainable drawdown rate at the start that will allow for annual inflationary increases.
Speak to your Financial Adviser about your annuity decision and to find out more about Old Mutual’s options.
Want to know more? Click here to speak to a financial adviser about retirement annuity options.
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