Your annuity options
When setting up your annuity the choices you make are important and cannot be changed once it is set up. You should consider both your immediate and long-term needs carefully when making your decisions as well as those of any dependents.
To help make these decisions the Annuity Supermarket will let you experiment with all your different options as many times as you like and see how they affect the income you would receive.
The main options available when using our service are listed below. You can mix and match to suit your needs and requirements. If you can't find the option you are looking for please call our helpdesk.
The five main choices you need to make are:
Single Life
The income will be paid throughout your life only. When you die the income will cease.
If you're in a relationship where you are financially dependent on each other, you should strongly consider choosing a joint life annuity which continues to pay an income to your spouse or partner, and consider how they would cope financially if you die first.
Joint Life
You can choose up to 100% of the income to continue being paid to your surviving partner after your death.
If you have protected rights (from contracting out of SERPS or the State Second Pension) and are married, separated or in a civil partnership, a 50% spouse's income for your protected rights must be chosen.
Income does not
increase
The amount of income paid will remain level and not increase. Although the income may be higher initially, you should bear in mind the effects of inflation over time.
Income keeps track
with inflation
You can choose for your income to move in line with the retail price index (RPI), meaning your income will keep track with inflation and therefore retain its buying power.
Income increases by fixed percentage
You can choose for your income to rise by a fixed percentage each year (such as 3% or 5%). This means your income could counter the effects of inflation.
No guarantee period
Unless you have selected a joint life annuity the income will stop upon your death, even if you die shortly after taking the annuity.
Guarantee period
You can choose for the income to be guaranteed for a period of time (normally five or 10 years). This means if you die within this time the income will continue to be paid for the remaining period.
No value protection
If you die before age 75 and have a single life annuity with no guarantee period, no further money will be paid out.
Value protection
This protects the capital of your annuity if you die before age 75. If you die before the total gross income exceeds the amount of the fund used to buy the annuity, the balance will be paid less a 35% tax charge. Please contact our helpdesk for a quotation including value protection.
Payment in advance
This means you receive your first payment straight away.
Payment in arrears
This means you wait until the end of the chosen payment period.
You can also choose for your income to be paid monthly, quarterly, half yearly or annually.
In summary
The options you choose will affect the level of income you receive from your annuity. For instance, by choosing an income that remains level you will receive a much higher initial income than by choosing an income that increases over time. Take a few minutes to try out different options in our Annuity Supermarket to see what effect these will have on your income.