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Protected Retirement Plan

Fixed Term Annuity - value protection

Your client chooses at the outset whether they want to protect the full value of their annuity or just a proportion of it.

The maximum lump-sum payable under value protection is the initial annuity purchase price, less the sum of the income paid from the annuity.

Your client can choose to combine a beneficiary’s annuity with value protection when they take out a Protected Retirement Plan. If combined, the beneficiary’s annuity is payable first, meaning the value protection lump-sum is only payable if both the client and beneficiary die during the plan term.

  • Clients who are concerned about losing out on their pension fund on early death, particularly those in ill health.
  • Clients who are more interested in lump-sum death benefits than annuity income.
  • Risk-averse clients who want a guaranteed income stream and the reassurance of lump-sum death benefits if they die.

Full value protection gives your client the opportunity of providing a lump-sum for their beneficiaries. It is equal to the initial annuity purchase price, less the total amount of income paid to both the member and any beneficiary.

Partial value protection works in a similar way to full value protection. However, only a proportion of the initial annuity purchase price is protected. In this case, the lump-sum payable will be the proportion of the initial annuity purchase price protected, less the total of any income paid to both the member and any beneficiary.

If the member dies before age 75, benefits can normally be paid tax-free. If they die at age 75 or older, the beneficiary will pay income tax at their personal rate.

The lump-sum death benefit can be paid to beneficiaries as a lump-sum, or they have the option to purchase another drawdown product or annuity product with the lump-sum.

To avoid the possibility of a further charge to inheritance tax, where possible we’ll exercise our discretion when selecting who should receive any lump-sum death benefit, although the member’s wishes will be taken into account.

The tax treatment of the plan will, in part, depend on your client’s personal tax status, which may be subject to change.

Please refer to the Key Features for further details of how benefits from your client’s plan will be taxed.

Any references to taxation are based on our understanding of current legislation and HM Revenue & Customs practice which can change.

The cost of value protection

The cost of value protection varies by individual and depends on several factors, including the member's age and state of health.

To see what this means for your client, please phone our quotes team on 0800 085 0250 and we'll be happy to help. Our lines are open from 8.30am - 5.30pm Monday to Friday. For TextDirect, first dial 18001.

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