Retirement Income & Pension Schemes

Once you have made the decision to retire, you need to consider how much retirement income you will need to live off for the rest of your life.

Following the pension changes announced in the 2014 Budget, please note that the annuity section of our site has not yet been updated - see our Q&A Section for more details

Or visit our recent pension articles with all the latest updates here

To understand what is available to you, work out the following:

• How much your pension pot will be worth?

• What are your open market options? (Key Retirement will help you search the market for the best rates)

• Whether you qualify for a state pension?

• If you are entitled to any other benefits

• Whether you want or need to work part time?

• Do you have any other savings, shares or property etc.

In the run up to retiring, your retirement income will be determined by a few key decisions. Many people believe that at this point there is nothing you can do to change the final total of your pension income and that the amount will be determined by the pension provider you have been paying into.

This is NOT true!

Instead of choosing your existing pension provider, you can compare pension annuities with the help of a company like Key Retirement and select the best deal using the ‘open market option’; basically this is your right to shop around.

People with potentially larger pension funds may not wish to convert them into an annuity right away and could take what is known as an Income Drawdown. You can find out more about this at the Money Advice Service

Your Pension Schemes 

The type of pension scheme you have, or schemes if you have several pension pots, will determine whether you can buy an annuity.

Final Salary Pension

The final salary pension is based on the number of years worked at that company. Your pension is then paid as a percentage of your final salary. 

If you have one or more final salary pensions, you should contact the employer directly to establish the scheme rules and your retirement income. These schemes do not have an open market option and so you will not be able to buy an annuity.

Money Purchase Pension

It’s more likely that your pension pot is made up of contributions from you and your employer in a money purchase pension scheme, commonly known as a ‘company pension scheme’.

With a Money purchase pension you will be able to buy an annuity and most importantly, exercise your right to shop around and compare the best annuities with the open market option.

If you have more than one pension scheme, your first task will be to track them all down so that you can establish the total value of your pension pot. You will then know how much your annuity will be based on in order to provide your retirement income.

If you don’t have all your personal pension statements to hand, you can use the Pension Tracing Service or alternatively contact your previous employers.

If your pension plan was started before the mid 1980’s, then you should establish whether there is a ‘guaranteed minimum pension’. Whilst this is rare, it could mean a higher income than a new annuity taken out today so it is worth checking.

Personal Pension

You may have set up your own personal pension directly with the pension provider, perhaps because you are self employed or you wanted to make additional voluntary contributions to your company scheme.

Under any personal pension plan you will be able to purchase an annuity. 

State Pension

The State Pension is a payment you receive from the government when you reach state pension age which is based on your National Insurance contributions. 

If you choose to retire early, you will not receive a pension from the government until you reach state pension age at which time you may find the total is lower depending on your national insurance contributions made. 

To find out more, visit the State Pension website for details. 

In Summary

It is possible that you may have pensions from several types of schemes, so it’s important to understand which ones you have before getting annuity quotes, as this will affect your retirement income!


To help you see how much extra retirement income you could get, why not use the quick and easy annuities calculator, then if you want more information, the experts at Key Retirement are on hand to help.

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