Risks and considerations
A fixed-term annuity can provide you with access to a pension income for a period of time up to 25 years, but unlike a conventional annuity will not offer to guarantee an income for life. During the term of the plan you will have the certainty of a known level of income that will not change, no fluctuations in the value of the fund and a pre-determined guaranteed maturity value.
What you cannot be certain about is what ongoing income the maturing fund will be able to secure, which may be less than the income during the term or what may have been available should you have bought a lifetime annuity at the start of the term.
Further, if you choose a fixed-term annuity as you expect your health, circumstances or annuity rates to change during the term, and the changes do not occur then you may not benefit from the main reasons for considering this pension-income option.
It’s also important to remember that you are fixed into whichever length of term you choose and that any options you have selected cannot be altered during that chosen term. For example you will be unable to change the level of income you are receiving or make any ad-hoc withdrawals for the duration of your fixed-term.
Before taking any decision to secure a fixed-term annuity plan, it is important to talk to experienced financial advisors and any members of the family you trust or who may be directly impacted by the decision. Due consideration and careful planning is required before making any commitment, so it is vital that you are 100% sure of any decision.
The Age Partnership team can help guide you through the benefits as well as any risks when considering a fixed-term annuity. Our experienced advisors will keep you informed of the changing landscape and how your changing circumstances could affect your investment. This can help you avoid mistakes in the decision making process, or provide peace of mind if you decide to commit.