Retirement: 6 things to do after you have bought an Annuity


So, you’ve bought your Annuity, time to relax and enjoy your retirement?

Yes definitely, and we hope you enjoy it, but before you get too used to retirement, we’ve come up with a few extra things for you to consider doing to make sure your finances are as well organised as possible.

1.    Check that the Annuity has been set up correctly

Far be it from us to suggest that life companies and Annuity providers get things wrong, but we all make mistakes from time to time and they are no exception.

If you’ve arranged your Annuity through us you can be sure that we’ve checked your policy documents and confirmed that the Annuity has been set up correctly, with the various options you requested applied in the right way.

However, if you have arranged the Annuity directly with the insurer yourself it would pay to spend a few minutes checking it has been set up according to your instructions; better to find a mistake now before it’s too late.

2.    Check that tax is being deducted in the right way

Age Personal Allowance: 2011/12 Personal Allowance: 2012/13
Below 65 £7,475 £8,105
65 – 74 £9,940 £10,500
75 and over £10,090 £10,660

If your Annuity income is above the Personal Allowance (see table, right) then you will have to pay tax on the income, for basic rate taxpayers this is 20% rising to 40% for higher rate tax payers,

HMRC send the Annuity provider your tax code which tells them how much tax to deduct before making payments to you.

You will receive a PAYE Notice of Coding, you should check that this is right, again HMRC have been known to make mistakes.

If you are unsure of what your tax code should be, or whether HMRC have got yours right, we are happy to help, simply call us on 0115 933 8433 and ask to speak to an adviser.

3.    What to do with your tax free lump?

Spend, save or invest, are the usual options for your tax free lump sum.

As much as we’d like to help you spend your tax free lump sum that’s probably for you to sort out on your own!

However we can help with the saving and investment options.

The first thing you need to decide is whether you are a saver or investor, and whether you want capital growth or an income.

For both savers and investors using your tax free allowances such as ISAs (Individual Savings Accounts) makes sense to start with followed by other saving and investing options dependent on your circumstances.

Our advisers can help you make the right decisions

The Investment Sense team of Independent Financial Advisers in Nottingham

Contact our team of advisers today:

0115 933 8433

Online enquiry form

4.    Purchased Life Annuities

If you are looking for a guaranteed income then you should probably consider a Purchased Life Annuity (PLA).

A PLA works in a very similar way to an ordinary Lifetime Annuity; it pays a guaranteed income for the rest of your life, and can include options such as spouse’s pensions, guaranteed rates and indexation.

However, those nice people at HMRC see some of the ‘income’ as a return of capital and therefore do not charge income tax on all of the monthly payment you receive.

The fact that HMRC do not charge income tax on all the income can make a PLA a very tax efficient way of providing you with a guaranteed level of income.

If you would like to see what income a PLA could give you, one of our advisers would be happy to search the market to find the best quote, simply call us today on 0115 933 8433 or complete an online enquiry form.

5.    Review your Will

“We must do that”, “We’ve been meaning to get round to it”, “Where is it?”

These are just a few of the comments we get when our advisers talk to people about their wills, sound familiar?

You might have received a significant tax free lump sum after buying your Annuity, which could make now the perfect time to make a will or perhaps review an existing will which could now be out of date.

A recent survey found that 60% of us don’t have a will. There are several consequences of not having a will, covered in a previous article we wrote, which can be found here.

We would always recommend that you have a valid will in place and now is the perfect time to make sure yours reflects your wishes and is up to date.

6.    Review your other savings & investments

We often find that people have spent so much time and effort into making sure that they have the right retirement income solution, whether that is an Annuity, Income Drawdown or some other alternative, that they neglect their other savings and investments.

Now your retirement income is sorted now is the perfect time to go back and review your other money.

Make sure your savings are getting the best possible rate of interest, scour the best buy savings accounts to get the best rates; be ruthless and move accounts which are not competitive.

Review your investments too, how are they performing? What are you being charged? Are you happy with the risk being taken?

Now is the perfect time to review your savings and investments, your income is sorted, why shouldn’t your other money be too?


We know retirement is a time to be enjoyed, and it’s probably a relief to have sorted out your Annuity, we know it can be a stressful time, but take a little time out from the busy world of retirement to follow our six ideas to make sure your retirement is as financially worry free as possible.

Our team of Independent Financial Advisers in Nottingham are experienced in making savings and investments work harder for you as well as being highly qualified when it comes to your retirement options.

If would like advice on your savings, investments, an existing Annuity or Income Drawdown call one of our IFAs today on 0115 933 8433, alternatively enquire online or email