Your options for buying an annuity
With your current pension provider
This involves the least amount of work, simply sign and return the forms that they send you. The downside is that the annuity rate is likely to be much less than you can get elsewhere. Hopefully, you have determined this already and can decide whether or not to consider an alternative.
Direct to an annuity provider
You may have found an annuity rate that you are happy with and decide to apply direct to the annuity provider. However, when they confirm the rate it is less than you have found elsewhere. The reason for this is that they make an administrative charge, which comes directly out of your fund and this reduces the annuity rate. The annuity provider is unlikely to offer any advice, so you will not be informed if there is a more suitable option. Applying direct may prove to be false economy.
via a Financial Adviser
The Financial Services Authority has ruled that commission cannot be taken from an annuity contract where advice is provided; a fee must be charged but this can be taken directly from the fund with your permission. The benefit of using a financial adviser is that they will be able to provide advice and guidance, so you can be sure that all bases have been covered. Should the advice prove to be flawed then you may be able to obtain redress. While this will be more expensive than an execution only service (see below) it is likely to be cheaper than going direct or remaining with your pension provider. Furthermore, and very importantly, it offers the greatest protection and ensures that other options have been considered.
Execution Only Fixed Price Service
If you know what you want, who you want to buy it from and which options to include then you might consider an execution only service. No advice will be given and you will not be protected if things go wrong but it may be the cheapest option if you know what you are doing. We offer this service for a flat fee of £250. If you have a small pension fund (less than £25,000) then this may not be the cheapest option or the savings may not seem worthwhile. For larger funds this is likely to be the cheapest option but remember, there is no advice and other options will not be discussed with you, so if it turns out you made the wrong choice then it is down to you.