What is a Fixed Term Retirement Plan?

Regular income, ending with a lump sum

Our Fixed Term Retirement Plan, like an annuity, lets you use your pension pot to buy a guaranteed income, but for between three and 25 years, with a lump sum at the end.  This product may be for you if you want guaranteed income for now and the ability, after the plan ends, to make new choices.

  • Secure and guaranteed income

    A guaranteed, regular income you can plan around, with confidence.

  • Payment options

    Your payments can be made monthly, quarterly, half-yearly or yearly and either at the start (in advance) or at the end (in arrears) of the payment period.

  • Gives you control

    You can set the plan length, the regular income amount and the lump sum ‘maturity’ value.

  • Creates options later in retirement

    At the end, you can use the lump sum as you see fit. If your health was to deteriorate by the end of the plan; you may be able to buy an annuity at a better rate.

  • Options to protect your beneficiaries

    You can choose for your beneficiary to receive any remaining income payments and maturity value if you die during the plan.

  • Withdrawal from the lump sum

    Depending on the options you choose when you take your plan out, you may be able to make three withdrawals from the lump sum that’s paid at the end of the term. More details on the Guaranteed Minimum Payment Period are in the Key Features document.

    Full details on these features are in the Key Features

  • Am I eligible?

    You must be aged between 55 and 85 and have at least £10,000 left in a pension pot to buy one after you’ve taken your tax-free cash.

  • I want some flexibility, later

    If you'd like guaranteed income but also want to give 'future you' some options, this may be for you. You’ll be able to decide what you want to do with the lump sum when the plan ends.

  • We're both fit and healthy

    If you’re healthy then, you can't get a higher income with an annuity today. However, if you were to wait and perhaps you can in later life, using your lump sum. If you have health conditions or lifestyle risks then you may be able to get a higher income now.

  • I want security from risks

    Your income is guaranteed and is not affected by the performance of investment markets.

  • Tax-free cash

    You can take up to 25% of your pension pot as tax-free cash. If you don’t take the tax-free cash at the start of your plan, you can’t take it later.

  • Taxable income

    Payments will be taxed as income, which could affect any benefits you claim. The amount of tax you pay on income from the plan will depend on your circumstances, and may change based on your income tax rate.

  • Higher income means a smaller lump sum

    Choosing a higher income will reduce the lump sum, similarly if you choose a lower income, you could get a higher lump sum. You can also choose not to take an income at all and just get your lump sum at the end.

  • With security comes less flexibility

    You won't be able to change the amount you get, but if your circumstances change you may be able to cash it in or transfer it to another pension product.

  • When it's gone, it's gone

    Once the plan ends you won't have this regular income any more. It’s important to consider if you will have another source of income to replace it.

  • Health risks not recognised

    If you or your dependant has a health or lifestyle risk, a Pension Annuity, or products that take your health into account, may offer a higher income.

  • Mind out for inflation

    You’ll get the same income every year. This means, with inflation, it may not buy as much in the future. Even with modest inflation, 20 years may halve the power of a £1 - will your lump sum be enough?

 

Retirement income products compared

  Guaranteed income (Pension Annuity) Fixed Term Retirement Plan Cash-Out Retirement Plan Flexible income (Drawdown)
Does it provide regular income? Yes Yes Yes Yes
Will I have a guaranteed income each month? Yes Yes Yes No
Is my income guaranteed to last my whole life? Yes No No No
Can I change how much I get? No No No Yes
Am I exposed to market risks, up or down? No No No Yes
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Next steps

Now that you’ve learnt more about our Fixed Term Retirement Plan, why not get a free personalised quote, and look at other products available as part of your shopping around. Other providers may have more appropriate products or be able to offer a higher level of retirement income.

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Making decisions about financing your retirement is important so it’s worth shopping around and using available guidance and advice, before you buy:

Retirement guidance

Pension wise

The Government’s impartial retirement guidance will help you avoid the risks and think about what’s right for you.

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Our colleagues in Cardiff are always happy to help with your questions or to help you apply for a quote.

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