Your Fixed-Term Annuity Options
There are several choices that you will need to make when selecting your fixed-term annuity, all of which will impact on the guaranteed maturity value you will receive at the end of the term. To ensure that you can make an informed choice, we’ve put together the following summary of your options.
We will take you through all of these options when you compare fixed-term annuities using our telephone service. Alternatively, you can get an initial quote using our fixed-term annuity calculator.
If you have pension savings with more than one company, you may be able to add them together to buy one fixed-term annuity should you wish to.
How much income do you need or want to take?
This will depend upon the value of your pension savings, which varies from person to person and your age at the time you purchase the fixed-term annuity.
The level of income you take will impact upon the guaranteed maturity value you will receive at the end of the term, the higher the income the lower the maturity value.
You could select not to take a regular income if you wish and simply just access your 25% tax-free cash allowance before purchasing your fixed-term annuity with your remaining fund.
How long a fixed-term would you like to choose?
This depends upon the reason you are choosing a fixed-term annuity. Generally you can choose a fixed-term of anywhere from 3 to 25 years.
You may choose a term to tie in with a life event, such as retiring from work, a company pension commencing payment or reaching state pension age.
For those who expect either their personal or economic conditions to change, you will need to consider over what period of time you think these changes might take place as there is always the risk that any expected changes may not occur during the term.
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.
How often would you like to receive your pension payments?
When you buy a fixed-term annuity you can select the intervals at which you would like to receive your pension income. This can be monthly, quarterly, half-yearly or annually. You can also choose whether you would like to be paid at the beginning or at the end of each interval.
Is the Fixed-Term Annuity just for you, or for you and your partner?
If you’re married or have a partner, it is vitally important to consider what income they will have if you pass away before them.
If you decide that you would like to provide a lump sum amount or regular income (or indeed, both) to a spouse/partner should you die before them, you could choose a ‘joint-life fixed-term annuity’. You could choose to allow for a one-off lump-sum payment or for all/a proportion of your pension income to continue to be paid to a loved one for the rest of the chosen term.
A ‘single-life fixed-term annuity’ provides a pension income just for you and will stop once you have passed away, unless you buy a guarantee, which we explain below.
Do you want to protect your funds during the fixed-term?
You can choose to include an option called ‘value protection’. If you choose this option and pass away before the end of the fixed-term, your beneficiaries would receive the value of your initial investment as a lump sum, less any income that you may have already taken.