The options available under a Traditional Annuity Purchase are shown below. It is important to be aware of all the options before you purchase an annuity as in most instances, an annuity is a final purchase and cannot be unwound. It is therefore essential that the correct product is chosen at outset.
Guaranteed Fixed/Level – A guaranteed and maximised annuity income that will remain level from outset. Not protected from the future effects of inflation.
Escalating – A lower starting income than a level annuity but with a guarantee to increase at a given percentage annually. Not necessarily protected from the future effects of inflation.
Index-linked – A lower starting income than a level annuity but with a guarantee to fluctuate in line with the changes in the Retail Prices Index. Can be capped at a maximum percentage increase.
Non Guaranteed Annuities
With-Profits – Income dependent upon the performance of the underlying with-profits fund. The income can rise or fall dependent on performance on an annual basis.
Unit-linked – Income dependent upon the performance of the underlying chosen investments. The income can rise or fall dependent on performance with each payment.
Guarantee Period – Payments guaranteed for selected number of years regardless of survival. If you outlive the guarantee period, payments will continue until death.
Value Protection – A lump sum equal to the original purchase price less payments received to date of death is paid on death before age 75. If a joint life annuity is purchased, this would apply to the later of the two deaths before age 75.
Spouse, Civil Partner, Dependant’s Pension – An income for your spouse, civil partner or dependant payable on your death, which is equal to a chosen percentage of your income.
To discuss your options further, please contact ‘The Retirement Adviser’ FREE on 0800 022 3103.
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