Pension Annuity

Allows your clients to plan their future knowing what their income will be each year

What is a Pension Annuity

Our Pension Annuity is a lifetime annuity which pays your client a regular income, guaranteed for the rest of their life.

Your client can tailor the income to meet their needs, so they'll know exactly what they'll be receiving and when. Options could include;

Your client may receive a higher income, also known as an enhanced income, if they have certain health or lifestyle conditions, such as smoking or being overweight.
An option to have income which increases annually to protect against inflation.
A range of death benefits to provide income for dependants in the event of your client's death.
Clients can choose payment frequency to be monthly, quarterly, half yearly or yearly; in advance or in arrears.

Our recent study with the world-leading Happiness Research Institute, an independent Danish think tank found a direct connection between financial security and wellbeing in retirement, and annuities and happiness.

So, when you help your clients choose a guaranteed income, you’re setting them up for success and most importantly, happiness.

A Pension Annuity may be suitable for clients who:

Are aged 55 and over.
Want a guaranteed income for life.
Don't want their pension to be subject to any investment risk.
Want to buy annuities in stages to make up a reduced wage or salary.
Want to manage their income to maximise tax efficiencies.
Have a pension pot of at least £10,000, after any tax-free cash and an adviser charge, if applicable.

A Pension Annuity can:

Provide an income for your client as well as what they receive from a State Pension.
Help your client who is concerned about inflation and would prefer an income which increases annually.
Reduce the investment risk of some or all of your client's pension pots.
Be used as part of a phased retirement, partially buying annuities to reduce investment risk on pension pots gradually.
Provide death benefits such as spouse's pension or a guaranteed minimum payment period.
Provide value protection. Your client can choose if they want to protect all or part of the original amount that they used to buy the annuity.

What are the risks?

There are risks to your client too. They include:

Your client could lose money - pension annuities don’t have a ‘cash-in’ value and the total income paid from your client’s annuity could be less than the amount they used to buy it. A guaranteed minimum payment period and/or dependant's pension can be added to reduce this risk.
Timing - the amount of pension income we’ll offer your client will be based on our annuity rates at the time. If they buy when rates are low, their income will reflect this.
Inflation - price inflation can reduce the real value of your client’s income over time, which could mean that it doesn’t stretch as far in future years, an increasing income can reduce this risk.
It's a once and for all decision. Once their annuity is in payment your client can't change any of their payment options, even if their circumstances change.
Deteriorating health. The pension income we offer your client will be based on the information they provide when they apply. If their health subsequently deteriorates, we won’t be able to increase their income.

Our Pension Annuity has been developed with options and death benefits that can be tailored to your clients' needs to help you build unique retirement income solutions.

Please note, terms and conditions apply to each option. For further information please see the Pension Annuity Terms and Conditions PDF: 1.8MB

Each option has a cost which is considered when we calculate the starting income. There are no further costs or charges once the annuity is in payment.

The options available to your clients are:

Enhanced

If your client has a qualifying medical or lifestyle condition, our fully underwritten annuity means that they could receive an enhanced level of income throughout their retirement.

Income options

Fixed income - the same amount each year for the rest of your client's life.
Increasing income - income will increase by a fixed percentage each year up to 10%, chosen at outset.
Inflation proof - income will increase in line with the Retail Prices Index (RPI) each year or 5% with RPI capped, referred to as Limited Price Indexation.

Payments

Monthly, quarterly, every six months or every year, either:

In advance - at the start of the payment period; or
In arrears - at the end of the payment period.

Final (partial) income instalment

Widely referred to as 'with proportion', this option is available for 'in arrears' payments and provides a final amount for the period between the last income payment and the day your client actually dies.

Dependant's pension

Your client's spouse, registered civil partner or financially dependent partner continue to receive some of the pension income (up to 100%), if your client dies.

Guaranteed minimum payment period

If your client selects this option and dies during the chosen period, their annuity will continue to be paid to their estate for the rest of the guaranteed minimum payment period.
Terms of up to 30 years from the date the annuity starts can be chosen, with a maximum age at the end of the period of 100. This means that if your client is above age 70, the longest period will need to be lower than 30 years.

Overlap

If a guaranteed minimum payment period and dependant's pension are selected your client can choose when the dependant's pension starts. This can be when your client dies (known as 'with overlap') or when the guaranteed minimum payment period ends (known as 'without overlap').

Value protection

This option allows your client to protect all or part of the amount used to buy their pension annuity. Clients can select this option alongside a dependant’s pension but it cannot be used together with a guaranteed minimum payment period.

Our Enhanced Pension Annuity can offer clients extra income where they've one or more medical condition or lifestyle health risk.

Your client's income will be based directly on their health at the time they buy their annuity. It's important that you give us full and accurate information about any medical conditions and/or lifestyle health risks. Terms and conditions apply to enhanced annuity rates.

Accurate underwriting is essential to providing your clients with the maximum income we can offer.

Read our guide for more information, where you'll find all of our potential qualifying medical conditions. Please contact us if your client has a condition not listed on our guide.

pdf - 2.71 MB

A guide to our underwriting requirements

Compare our annuity products

Our annuity products may appear similar, but it's important to understand the differences between each product. We've pulled out some of the key points below.

	Pension Annuity	Fixed Term Retirement Plan	Cash-Out Retirement Plan
Age	55+	55+	55+
Minimum investment	£10,000	£10,000	£10,000
Maximum investment	£1,000,000. If over that amount, it will be passed to our underwriting team	Unlimited - but additional checks to be carried out on large amounts	Unlimited - but additional checks to be carried out on large amounts
Source of funds	Pension savings	Pension savings	Pension savings
Term	Life	3 to 25 years	3 to 25 years
Guaranteed Minimum Payment Period	1 to 30 years	Included for full term	Included for full term
Ability to cash in or transfer during the plan		Included¹	Included¹
Ability to take withdrawals during the plan		Included²
Value Protection
Spouse/Dependant benefit
Maturity value
Option to choose an increasing income in line with Retail Prices Index (RPI)³
Option to choose an increasing income by a fixed percentage
Underwritten
		Fixed term annuities
¹Available at any time during the term of your client's plan. We’ll calculate this by giving a value to the future income payments and/or maturity due to them and deduct our administration and dealing costs. This will be affected by the underlying assets and interest rates at the time, which will go up and down. ²Your client has the option to take up to three withdrawals from the full maturity value. This can be done at any time during the term of the plan, and is subject to a minimum withdrawal of £5,000 each time. This will be subject to us deducting our administration and dealing costs and means the maturity value will be recalculated. ³RPI is the index of the average change in the prices of goods and services in the UK. For our Pension Annuity, your client can choose to have the increase capped at 5%, referred to as the Limited Price Index (LPI). If they choose an income that increases over time, the income we’ll pay them to begin with will be lower than if they'd chosen a level income.

Tools and apply

Apply online

You can now apply online for our Pension Annuity and fixed term annuities products.

Quoting and portals

Find out how to quote for our annuity products, how portals can support your business and what further training is available with us.

Track My Apps

Our unique and simple online tool that will help you follow the progress of your new business Pension Annuity and fixed term annuity applications from start to finish.