When buying our Pension Annuity, you will have a number of options. The annuity options you choose will have a bearing on your starting level of income.
Why not try our annuity calculator to see how different options could affect your income
The cost of each of the options below will be taken into account in the income we offer.
1) How do you want your pension income paid?
You will need to tell us whether you want your income paid in advance or in arrears and the number of instalments you want each year. Instalments can be:
- Yearly - 1 yearly instalment
- Half-yearly - 2 instalments each year, every six months
- Quarterly - 4 instalments each year, every three months
- Monthly - 12 monthly instalments.
Yearly in arrears is the cheapest option and yearly in advance the most costly.
2) Do you want your income to remain fixed or to increase each year?
You can choose to either fix your pension income at its starting level or have it increase each year. Increases may either be by a fixed percentage of between 0.1% and 10% each year or in line with inflation (based on the Retail Prices Index).
A fixed income will have a higher starting level than one that increases, but will have reduced buying power in the future assuming price inflation. The larger the annual increases requested the lower your starting level of income will be.
The remaining options (3 to 7) below, relate to optional death benefits that you can add.
3) Do you want a final partial income instalment to be paid after you die?
This annuity option is only available when you choose to receive your income in arrears. You can opt for a final pension payment to be made for the period between your last instalment and your death ('with proportion'). 'Without proportion' would mean no final payment will be made, so is the cheaper of the two options.
4) Would you like to add a guaranteed minimum payment period?
Our Pension Annuity will pay you a pension income for the rest of your life but income payments will stop when you die.
You can however arrange for income payments to continue for a period of between 1 and 10 years from your annuity start date. If you die during that period, your income will continue until the end of the guaranteed payment period. The longer the guarantee period the more costly this option is.
5) Do you want to provide an income for your partner if you die before them?
You can choose for your partner (spouse, registered civil partner or financially dependent partner) to continue to receive a percentage of your pension income after you die.
The larger the percentage the more costly this option is. An unmarried partner will need to prove they were financially dependent on you at the time of your death. Your dependant's pension income will continue for the rest of their life and will be taxed as income.
6) Do you want your guaranteed payment period and your partner’s pension payments to overlap?
If you die during your guaranteed payment period and you choose 'with overlap', then your partner’s pension payments will start whilst the remainder of your guaranteed payments are still being paid.
If you choose 'without overlap' your partner will have to wait until the end of your guarantee period before they start receiving their pension. Without overlap is a cheaper option than with overlap.
7) Is your dependant’s pension income for a named partner?
If you’re married or in a registered civil partnership, you can decide whether you want an income paid to your current partner (named); or paid to your partner at the time of your death (any).State Pension
Named is cheaper but if you choose this option and you re-marry, your partner at the time of your death (if different) will not be entitled to a dependant’s pension income.
If you’re not married or in a registered civil partnership when you buy your annuity and you want to provide benefits for your partner when you die, you must name them on your application.
If you're buying our Pension Annuity using funds built up from having contracted-out of the earnings related part of the State Pension, there may be certain restrictions on how we can pay you your income.Help
You can get one or more quotes
based on various combinations of the annuity options above by calling our Annuity Solutions team on 0800 048 0302. This could help you decide which options best fit your circumstances and budget.It is important to be aware that once your annuity is in payment, you will not be able to change your chosen options.