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Take your pick
The Stock Market has picked itself up off the floor (for the time being), but pension investments are still getting a bad press. Many people are worried that the money they have carefully saved up will not be worth much - or not as much as it might have been if they have done something else with it.
It's certainly true that a market low is not the best time to be cashing in your pension plan, because the capital value won't be very high. You might want to wait until the values have picked up a little, but of course that will run the risk of the market going further down.
There is one thing you can do to make the most of the value that you already have - it's called the "open market option". Many people think they have to take a pension annuity from the company you have used to save up the money - but you don't. You might get a better rate from a different insurer, and it can make a big difference - for example, a 65-year old non-smoking man might be quoted a pension rate of 6.8% by one company or 5.3% by another. If you have £100,000 to invest, that's a difference of £1,500 a year for the rest of your life.
Choosing an insurance company is something you should do with professional advice. You don't want just to go for the highest rate in all circumstances, because you also need to be confident that the company will last as long as you do, and you need to understand all the terms and conditions and other choices available. But the Financial Services Authority now operates a website (www.fsa.gov.uk/tables) which can give you some idea of what you can choose between, which could put you in a better position to understand the advice you are given.
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The FSA tables allow you to see the effects of building in guarantee periods or making the annuity for joint or single lives. There is also information about a range of other financial products regulated by the
FSA.
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