Income

Starting income will be based on a number of factors including:

• age
• size of pension fund
• annuity rates and prevailing market conditions
• postcode of main residence
• payment options chosen
• state of health and certain lifestyle choices

Income can then either be fixed and remain at the same level for your client’s lifetime, or increase each year. It will be taxed as earned income.

Postcode pricing

We believe that using your client’s postcode helps us to more accurately assess their life expectancy. This could mean we offer them a higher income but it will never result in us offering a lower income.

Yearly increases

An increasing income will start off at a lower level than a fixed income. The larger the yearly increases chosen the lower the starting income and it could take many years for an increasing income to ‘catch up’ with the fixed income level. The decision needs to be thought through carefully.

The graph below shows the differences between the starting levels of a fixed income annuity, and incomes increasing yearly by 1%, 3% and 5%. It also gives an indication of how long the increasing incomes are in payment before they start to pay a higher level than the fixed income.

Based on male age 60 with a £50,000 fund (after tax-free lump sum), single life only.

Charges

We take charges into account when we set the annuity rate. There are no further charges once the annuity is in payment.