Pension Income Plus Annuity
Providing a minimum income for your clients while aiming to improve future income with investment returns.
A Pension Income Plus Annuity (PIPA) is similar to a conventional annuity in that it guarantees to pay an income to your clients for the rest of their lives. However, the underlying annuity fund is invested in a wide range of investment assets, and the income payable each year depends on the investment returns of those assets.
Because the annuity is invested in a with-profits fund, we're able to smooth the variation in investment returns over a number of years, which reduces the income volatility that occurs in non with-profit investment linked annuities. We also provide guarantees so the income will never fall below certain levels.
How it works
When your client invests in a Pension Income Plus Annuity, they'll be asked what future investment returns they expect to receive. This is called the Assumed Investment Return (AIR). We'll then calculate the income they would receive using this AIR, and this is the amount provided in their first year.
LV= offers a guarantee that your client's income will not fall during the first two years following the start of their policy, provided that they remain alive for these two years.
Each following year, their income level is reviewed. If declared investment returns are higher than the selected AIR then their annuity will increase. However, if declared investment returns are less than anticipated, the annuity will decrease accordingly.
Are there any minimum income guarantees?
We guarantee that your clients will receive at least their initial level of income for the first 2 years, and never receive less income than the starting income they would have received if they had chosen an AIR of 0%.
What annuity options are there?
We offer a full range of annuity options, including value protection and enhanced rates for those that smoke or suffer from certain medical conditions. However, please note that some restrictions may apply to funds containing Protected Rights which, for example, must have a 0% AIR at the start.
Important things you should know
- As this is a with-profits investment this isn’t designed for customers who are expected to live less than ten years. These customers may be better off buying another type of annuity.
- If your client chooses a high starting income there is a greater risk that nvestment returns won’t be high enough to maintain their income level. However, we guarantee it won’t fall below the guaranteed minimum annuity income shown in their policy schedule.
- Inflation will reduce the real value of your client’s annuity if declared investment returns don’t keep up with inflation.