What is our Fixed Term Retirement Plan?
It’s a fixed term contract that will pay you a fixed regular income over a term of between 3 and 25 years, with a fixed lump sum payable at the end of the term.
To apply you must be aged between 55 and 85 and have at least £10,000 to invest after you’ve taken any tax-free cash you might want to withdraw.
It may be suitable for you if:
- You want a contract that will pay you set regular amounts over a period of your choice; and
- You want a fixed maturity value at the end of the plan term to decide what to do with, for example to buy another retirement product, buy a lifetime annuity or simply take the money out of your plan.
- You don’t want your pension pot to be subject to any investment risk.
It may not be suitable for you if:
- You want to withdraw cash amounts from your plan as and when you choose.
- You want to change the amount of income you receive during the plan term.
- You want an income that lasts for your lifetime and does not end at a set date in the future.
- You or your partner have certain lifestyle health risks or have been diagnosed with a more serious medical condition(s), which could lead to your income being higher through a product that assesses your health.
- You could immediately withdraw the full amount from your pension pot and not pay a higher rate of income tax than you’d normally pay. If you’re unsure of your income tax position, we recommend that you seek financial advice.
For more details please read the Key features of our Fixed Term Retirement Plan (PDF: 717KB)
What are the options?
You can tailor your Fixed Term Retirement Plan to your needs. The options you choose will determine your income.
|Tax-free cash||Take up to 25% of your pension pot as a tax-free cash sum. If you don't take it at the start of your plan, you won’t be able to take it later.|
|Amount of income or lump sum||Choose how much income you want, how often it's paid, and the lump sum at the end of your plan term. Choosing a higher income will reduce the lump sum, choosing a lower income will increase the lump sum. You can choose to receive no income at all with just a lump sum at the end of your plan term. Once you've decided and started your plan, you won’t be able to change these amounts.|
|Death benefits||Choose if you would like your income and lump sum value to be paid to a nominated beneficiary if you die before your plan ends.|
Example Fixed Term Retirement Plan
Molly is 55 and would like to top up her existing income. She invests £40,000 from an existing pension plan into a Fixed Term Retirement Plan and chooses:
- a term of five years;
- a fixed income of £2,750 each year; and
- a guaranteed minimum payment period of 5 years so all the income and maturity amount will continue to be paid to her beneficiary if she dies before the end of the term.
We calculate the maturity amount at the end of the five year term would be £28,000, which Molly can choose to use as she wishes.
Over the full term of the plan, the total amount due to be paid, before income tax, is:
Income: £2,750 x five years = £13,750
Maturity amount = £28,000
Total = £41,750
These are example figures only. For details of the actual amount that you could receive please ask us for a quote.
Important things to consider
- You can’t make any changes to the plan once it’s started.
- If your circumstances change during the term of the plan, you will not be able to cash it in or transfer to another scheme.
- As you'll receive a fixed income and maturity value, inflation will reduce the buying power of your income over time.
- Plan payments are income and are subject to income tax. This could affect any state benefits you claim.
- The tax you pay on the income from the plan will depend on your individual circumstances. This can change, and this may affect the income you receive from us.
- At the end of your plan the plan income will stop, and you will need to find another source of income.
- You may be able to obtain a higher amount of income through a product that assesses your health and offers higher returns for certain lifestyle or medical conditions.
A version of this product is available through financial advisers. Explore the How to choose section to see some of the different ways you can get help and advice.
Pension Guidance and Advice
We strongly recommend that you seek guidance from the Government’s free and impartial service Pension Wise.
Find out more about guidance or advice
Remember, it’s important to shop around and get as much guidance and advice as you need before you make any decisions on what is best for you. Other providers may have more appropriate products or be able to offer a higher level of retirement income.
We've done our best to avoid complex jargon but take a look at our jargon buster if you need more explanation on any terms we use.