Fixed Term Annuities
A fixed term annuity is actually a drawdown product and is governed by drawdown rules, therefore the death benefits are the same as drawdown. Fixed Term Annuities provide a flexible approach to your pension and provides a high level of certainty.
It could be used to access your:
- tax free cash and keep the remainder of your funds invested.
- tax free cash and take an income over a period of time to run down your fund in a tax advantageous way.
- tax free cash and take a level of income that you set. This could be higher or lower than you would be able to achieve with an annuity.
The remaining funds are invested in securities and due to the safe nature of this investment you will receive a Guaranteed Maturity Value (see below)
You can set the term of your Fixed Term Annuity for a period of more than 4 years and normally the return on this investment is better the longer the period it is invested for.
Guaranteed Maturity Value
This provides you with the peace of mind in knowing what your pension fund will be worth at the end of your chosen plan term. The provider takes into account the cash left after both your tax free cash and income is taken and decide what level of return they are willing to guarantee over the plan term. The risk on this is taken by the provider as you have a guaranteed maturity value.
Points you need to consider:
Once you have agreed the basis of your fixed term annuity it is not normally possible to change, this said, if there are significant changes to your circumstances such as health, death of a spouse or a change in your marital status some providers will enable you to make changes to your arrangements.
The policy expires at the end of the term you have chosen at which point you can use the Guaranteed Maturity Value to buy another pension product either in Drawdown or an Annuity.
This product may not be suitable for you if you would like to:
- Buy a product that offers a Guaranteed Income for life now.
- Change your income during the period of the Fixed Term Annuity.
- Try to improve your pension funds’ performance through different investment routes in the future.
Fixed Term Annuities, a flexible way to take your pension with built in certainty.
An annuity provides certainty but little flexibility at present and with annuity rates currently low due to world wide interest rates many people are looking for a temporary solution that provides the certainty of an annuity.
As stated earlier this product has no surprises as the investment return is provided to you from the start in the form of the Guaranteed Maturity Value. If you were looking for the benefits of an annuity as many people are but do not want to tie yourself in, this product could be the one for you.
By using this as a temporary pension arrangement you could benefit from:
- An increase in annuity rates should the worldwide interest rates increase in the future.
- Should your health worsen in the future you may qualify for an Enhanced Annuity
- As more pension products are being developed there may be a more suitable pension product available for you in the future
You could also find yourself in the situation where your personal circumstances have changed for example you marry or your spouse dies. The flexibility of a Fixed Term Annuity in such cases could be useful.
We shop the open market to obtain the best rates.
Frequently the best rates are provided by companies who only deal with intermediaries. We access this market on your behalf
We will endeavour to obtain the best rate for you from the market and will go “the extra mile” to achieve this.
FREE No Obligation Fixed Term Annuity Quote
We Provide A Free No Obligation Service To Help You Understand Your Fixed Term Annuity Options.
You need to understand your options
We can help you find tax efficient
ways of taking your pension.
To obtain the full death benefits of this drawdown product you require plan protection along with the Fixed Term Annuity.
To understand the tax implication on death benefits click here.