Adding a guaranteed period of payment to your annuity is another way of providing a benefit in the case of your death. You can choose from as little as a 5 year guarantee and there is no upper limit. The longer the guarantee the more the cost to the initial annuity
If you were to die within the guaranteed period your pension would continue to pay in full until the end of the term you took, i.e. should you die 3 years after taking your pension and you had a 10 year guarantee your pension would continue to pay in full for the remaining 7 years. It would then reduce to zero if it were a single life pension or if it was a joint life your spouse would receive the percentage you agreed at the start.
We will endeavour to obtain the best rate for you from the market and will go “the extra mile” to achieve this.
We obtain full underwriting on our Enhanced Annuities to provide the highest levels of income.
Not all companies are the same
Pension Annuity Options
When purchasing an annuity you normally only have one chance of buying the right product as you cannot at a later date change your mind. Your options, some listed below need to be the right ones for you as personal circumstances can vary.
Whilst we hope this is useful it may be best to contact us to gain a better understanding of the different ways you can take your pension annuity.
In it’s most basic form you can take your pension on a Single Life basis, with no death benefits or inflation protection. This will in effect provide you with the highest level of income. All the options below will reduce your income by various amounts.
Over a period of time inflation will reduce the real value of your annuity. There is an option to protect the value of your money by taking your annuity with escalation.
There are options to take yearly increments from 1% up to a maximum of 5%. There is a RPI option which pays at actual inflation levels up to a maximum of normally 5%.
Escalation does reduce your immediate pension income by varying levels dependent on the amount of escalation you require. The impact of escalation can be significant but it does provide the peace of mind that you will have an income that will offset some of the inflation impact.
Single or Joint life
If you would like to provide a death benefit to your spouse or someone who is financially dependent on you this can be achieved by taking a joint life policy. You are able to choose what level of benefit you leave and this is expressed as a percentage of the while amount. You can normally choose between 50%, 66% or 100%. The most popular tends to be 50%, which means that if you were to die before your dependent they would receive 50% of your pension. You are able to have different levels should you require.
The greater the percentage the less the annuity is initially, therefore a 50% benefit will provide a higher initial pension income than if you chose a 66% benefit.
You can also choose to protect the value of your pension fund by taking Value Protection. You can choose to protect up to 100% of the value of your fund. The following provides you with an example of how value protection works.
Value of Pension annuity fund £50,000
Annuity annual income £5,000
Years paid before death 3 years
Total income paid £15,000
Less Value of pension annuity £50,000
Value left to your estate £35,000