Our Pension Annuity

Our Pension Annuity is a lifetime annuity you can buy using the money from your pension pot. It will pay you an income for the rest of your life. In most cases, the earliest you can buy a pension annuity is age 55. You must have at least £5,000 to invest after you've taken any tax-free cash.

Overview

What are the options?

There are several options available so you can tailor your annuity to suit your needs. The options you choose will affect the level of income payable. 

Pension annuity options
Option Description
Tax-free lump sum Take up to 25% of your pension pot as a tax-free lump sum. If you don't take it at the start of our annuity, you won't be able to take it later.
Income options
  • Fixed income - take the same amount each year for the rest of your life.
  • Increasing income - increase your income by a fixed percentage each year for the rest of our life.
  • Inflation proof - increase your income in line with the retail prices index (RPI) each year for the rest of your life. The higher the level of increase you choose the lower your starting level of income will be.
Dependent's income  Pays your spouse, registered civil partner or financially dependent partner an income after you die. Choose from an amount of 50%, 67% or 100% of your income.
Guaranteed minimum payment period

A term of up to 30 years from the date the annuity starts, with a maximum age at the end of the period of 100. This means that if you're above age 70, the longest period you can choose will need to be lower than 30.

If you die during the guaranteed minimum payment period your income payments will continue to your estate or nominated beneficiaries at the same level. If you choose this option, your starting level of income will be lower. The longer the period you choose, the lower your income will be.

Payments   Monthly or annually either:
  • in advance - at the start of the payment period, or
  • in arrears - at the end of the payment period. 

Is it suitable for me?

Pension Annuity - is it suitable for me?

 It may be suitable for you if:

  • You want an income payable for your lifetime, including the option for it to increase annually to protect against inflation.

  • You want your dependent to receive an income if you die before they do.

  • You don't want your pension pot to be subject to any investment risk.

  • You or your partner have certain lifestyle health risks, or have been diagnosed with a more serious medical condition(s) in which case your income would be higher.

It may not be suitable for you if:

  • You want to withdraw cash amounts from your plan as and when you choose.

  • You want a maturity payment.

  • You want to change any of the options on the plan once it has started.

  • You want your income to vary depending on investment conditions.

You can apply directly for our Pension Annuity, or a version of this product is available through financial advisers.

Important things to consider

  • If you buy a pension annuity, you can't change your mind afterwards. The options you select when you buy the annuity can't be changed later on.
  • The annuity can't be cashed in or surrendered at any time.
  • Annuity payments are classed as income and are subject to income tax, and could affect any state benefits you claim.
  • Depending on how long you live, you may receive less than you paid for your annuity.
  • If you have any medical conditions or lifestyle health risks it is important to let us know when completing your application. They may increase the amount of income we can pay you.
  • It's important to ensure any medical and lifestyle information you give us is both accurate and complete so we can pay you the maximum level of income you're entitled to.
  • We may request a report from your doctor after your income starts to check any medical and lifestyle information you've given us. Your income may be adjusted if we find the report doesn't support what you've told us.

Frequently asked questions

How much can I take tax free?

You can take up to 25% of your pension pot as a tax-free lump sum. If you don't take it a the start of your annuity, you won't be able take it later.

Will I have to pay income tax?

Your annuity payments will be taxed as income. Tax will be deducted at source and we'll send you a p60 every year confirming this. The tax you pay can change, and this will affect the income you receive from us.

What will happen when I die?

If you've selected a dependent's annuity or guaranteed minimum payment period, the tax treatment of those payments will depend on your age when you die. If you die before you reach age 75, any payments made to your beneficiaries will not be subject to income tax. If you die after you reach 75, your beneficiaries will pay income tax at their marginal rate of income tax.

Your next steps

Ready to find out more?

You may choose to work through all the product sections below.

Or take a look at

Our Retirement Income Calculator allows you to quickly see what income you might expect from our range of retirement solutions.

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You can get a quote online for any of our retirement products.