Hunt out the best annuities

"I know you advise people to hunt around for the best deal when they are ready to draw their pension, but how do I go about this?

"Do I hunt first and ask the provider to deal with the company I have saved with, or do I need to go to a financial adviser, and if so will they charge for the service?"

Ask the Professionals: Francis Klonowski, principal of Klonowski & Co in Leeds, says:

You don’t have to use a financial adviser if all you want is the best annuity rate. They don’t have access to any special rates that you couldn’t access yourself – through an annuity comparison website, for example.

If you decide to pick one yourself, once you’ve made your choice, you complete and submit the application. It will include an instruction for your existing provider to transfer the funds to the annuity provider. Some ask you to send this direct to the existing provider, but most will do it for you as they have to complete their own regulatory details.

The Financial Services Authority has a very good comparison table on its website,, which is 
supported by helpful explanations about such things as annuities and income drawdown.

Read Moneywise's guide on harvesting more from your pension pot

However, while you can do it 
yourself, an adviser may prove their worth in helping you decide between the different options, such as level or rising payments; guarantee periods; whether to include a spouse’s pension; and whether or not to take the 
tax-free cash.

They can also deal with the 
all-important, and increasingly 
complex, issues of impaired life/
enhanced annuities, which pay a higher than normal income if you have a health problem that threatens to reduce your lifespan or if you are overweight or smoke regularly. And, if you’re prepared to take some risk, they can also help you get your head round investment-linked contracts.    

I believe it’s only right you should pay for such advice. Normally, the 
annuity provider pays a commission of 1% to the financial adviser, but you should consider using one who works on a fee basis. That means, if you go ahead with the annuity, they will 
usually offset the commission against the fees.