A retirement annuity plan is UK based pension plan. It has designed to provide a lump sum amount after retirement. The plan has segregated the amount into two parts. One part may be use to buy the annuity and the part can serve as tax-free lump sum. The plan was introduce firstly in 1970, in under section 226 of income and corporation Taxes Act 1970 and referred as section 226 contract. After that, it has been legislated under section 620 of income and corporation Taxes Act 1988.Presently the plan referred as section 620 contracts. The investment in retirement annuity is tax-free. Even the income from the retirement annuity is also tax-free. When the annuity gets mature, you can collect tax-free cash.
It is a dependable security. If your working tenure is about to finish and you are confuse where to invest your money? Retirement annuity is the best place to invest you money. It is secure plan. It will give you a steady income for the rest of your life. The plan is not for spending only; it can be use for saving also. If you invest your lump sum amount in retirement annuity plan, your money is tax-free until the date you remove it from the plan. No doubts it helps you to save huge taxes and prevent you are saving from high taxation.
Retirement annuity can be of two types, namely fixed annuity and variable annuity. In fixed annuities, the income that you receive from the plan will never change. It depends on the investment that you deposit at the time of annuity purchase. In variable annuity, the income payments can be variable.
All retirement annuities are different in nature. The payment that the annuitants get will varies from company to company.
Even in the same company, different products of retirement annuity plan have different income payments and return rates. In some products of retirement annuity plan, allow the annuitants to remove some funds without giving penalties every year. In other cases, you can only remove interest. The plan offers you most comprehensive annuity rate. The annuity rate is the rate interest on the principal amount. Annuitants will receive this rate from the retirement annuity. The rate based on “index-linked gilts.” Apart from the fixed income payments for a particular period in future, it also provides the securities of your invested money. Generally, the annuity rates decline due to lower inflation and longer period expectancy.
The annuitant can purchase an annuity through an individual or a company. To get the highest the annuity rate, you can go for open market option. These additional features can added at the time of purchase. You can compare with the different annuity providers to get the highest annuity rate. After that detail research, you can select the retirement annuity plan, which gives you the guaranteed annuity rates and proper income forecasts. Therefore, your rest of the life after retirement will spend smoothly. You can enjoy the every aspect of life with full of fun and enjoyment as you do presently.