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Aug 7 2017

Legal – General – Retirement – Our Products – Pension Annuity #pension, #annuity, #options, #legal #& #general, #retirement, #guaranteed #period, #tax-free #lump #sum, #products

Pension Annuity.

What is our Pension Annuity?

It s 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. To apply you must be at least 55 years old and have at least 5,000 to invest after you ve taken any tax-free cash you might want to withdraw.

It may be suitable for you if:

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

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.

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 your annuity, you won t be able to take it later.

  • Fixed income the same amount each year for the rest of your life.
  • Increasing income the income will increase by a fixed percentage each year for the rest of your life.
  • Inflation proof the income will increase in line with the Retail Prices Index (RPI) each year for the rest of your life (this option is not available if you qualify for our enhanced Pension Annuity).

Pays your spouse, registered civil partner or financially dependent partner an income of up to 100% of yours, after you die.

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.

You could combine an income which has a guaranteed minimum payment period with an income payable to your dependant on death. In this case, you can choose whether their income starts as soon as you die (known as ‘with overlap’) or when the guaranteed minimum payment period ends (known as ‘without overlap’). If you choose ‘with overlap’ your starting level of income will be lower.

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.

In arrears payments can be made either; with proportion, which means when you die we’ll pay an amount to cover the period from the previous payment to the date of death. If you choose ‘with proportion’ your starting level of income will be lower; or without proportion, which means that we won’t make a payment to cover the period from the last payment to the date of death.

Important things to consider

  • Buying our Pension Annuity is a once and for all decision. The options you select when you buy the annuity cannot be changed later on.
  • The annuity cannot be cashed in or surrendered at any time.
  • If you buy a level annuity, inflation will reduce the buying power of your income over 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 disclose these as they may increase the amount of income we can pay you.
  • It s important to ensure any medical and/or 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/or lifestyle information you’ve given us. Your income may be adjusted if we find the report doesn’t support what you’ve told us.

What about tax?

Tax-free lump sum

Written by CREDIT

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