Protected Retirement Plan
Our Protected Retirement Plan is a fixed term product that gives a choice of term, income and death benefits at the start of the plan, plus a guaranteed maturity value.
Our Protected Retirement Plan has been designed to offer your clients a choice of some of the best features of both annuities and drawdown pension arrangements, without the investment risks of drawdown pension and without them having to commit to a set income for life as annuities do.
Main Features
Choice of income
The Protected Retirement Plan is written under drawdown pension rules. At the start of the plan your clients have a free choice of income between taking nothing, and under capped drawdown taking the maximum allowed under Government Actuary's Department (GAD) rules. Under flexible drawdown there are no income limits as long as the selected income is sustainable throughout the selected term.
Choice of term
The Protected Retirement Plan allows your clients to choose a term between 3 and 25 years.
Guaranteed maturity value
As long as your client is alive at the end of the chosen term a guaranteed maturity value will be available. Your clients can use this fund to buy an annuity, transfer to another drawdown pension arrangement, or invest in another Protected Retirement Plan (if eligible).
Clients in flexible drawdown can choose no maturity value at all or can choose to take the guaranteed maturity value as a final income payment, subject to income tax.
Death benefits
The Protected Retirement Plan offers a range of options that can be used to continue to pay an income or a lump sum to a spouse, civil partner or a financial dependant if your client dies before the plan maturity date.
The death benefits that are available are:
- Dependant’s income
- Guarantee period
- Value protection
Full details of the available benefits, what they will pay and how they become payable are provided in our guide ‘Protected Retirement Plan death benefits’.
Important things you should know
- Your client can't change the basis of their plan or cash it in at any time.
- To take our Protected Retirement Plan your client must be aged 55 or over. A dependant needs to be at least aged 40 when the plan starts if a dependants income is included.
- The term can be between three and 25 years.
- There is no maximum age.
- The minimum investment is £10,000 (after any tax-free cash has been taken).
- We only accept funds from registered pension schemes and can include protected rights. Flexible drawdown is not available for protected rights.
- For pension transfers your client must be living in the UK when the plan starts.
- We may have to reduce your client’s income and any dependant’s income because of applying the GAD maximum income limit for capped drawdown. If we do this we will pay the difference between the full income and the restricted income, plus interest, when the plan ends.
- There are no income restrictions for clients in flexible drawdown as long as the selected income is sustainable throughout the chosen term.
- How much tax your client pays depends on their personal circumstances. For details of how contributions and benefits from your client’s plan will be taxed, please see the Key Features document. Any references we make to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change. If the Government changes the tax treatment of this plan the income paid to your client may fall.
Related literature
For customers
For trustees