information

We use cookies to give you the best possible experience online. By continuing to use our website, you agree to receiving our cookies on your web browser. Visit our cookie policy page to find out more and how to change your cookie settings.

skip to main content

Fixed term annuities

Call us for a free chat on 0800 032 9301

Lines open: 8.30am to 6pm Monday to Friday

Flexible income on your terms

A fixed term annuity pays a guaranteed income for a specified term. You can choose any term between 3 and 25 years.

At the end of the term, you'll be paid a guaranteed amount, called a maturity value, which is stated at the beginning of your term. The maturity value is generally calculated on your investment size, less any income you receive. Charges are also deducted and any money earned on your invested pension funds is added.

Image alt text

Fixed term annuities from LV=

Discover our Protected Retirement Plan for a fixed term annuity with LV=

How taking a fixed term annuity now, could affect your options in the future

Advantages

  • Qualify for a potentially higher income from an enhanced annuity if health deteriorates during the course of your term
  • Delay buying a lifetime annuity if your circumstances are likely to change
  • Lifetime annuity rates could improve in the future
  • New products might emerge that are better suited to your needs

Disadvantages

  • Lifetime annuity rates could worsen
  • Changes in legislation or tax rules could be disadvantageous
  • Potentially better investment returns available elsewhere
  • If you cash in your fixed term annuity before the end of the term you may get back significantly less than the guaranteed value

Fixed term annuities explained

Video transcript

Meet Samuel, he’s 62. He’s been a teacher all of his working life and feels ready to devote more time to his family so he’s decided to switch to part-time hours to help look after his grandchildren.

Samuel is fortunate in that his job as a teacher comes with a final-salary pension that’ll pay out when he’s 65. He also has another personal pension pot that he’s paid small amounts of spare cash into over the years.

On top of his part-time salary, Samuel will use his personal pension to provide him with a fixed income for three years. After three years he’ll be eligible for both his final-salary pension and the state pension, leaving him enough to live comfortably, and spoil his grandchildren every now and then.

That’s Samuel’s story. If this is something you’d like to explore, talk to an adviser or get your online advice report today.

Things to consider when taking out a fixed term annuity

There are a number of options to choose from when taking out a fixed term annuity:

  • Term - You select the term you’d like. Commonly, people choose 5 or 10 years, but it can be any period between 3-25 years
  • Income - You decide how much income to receive each year (though the higher the income, the lower the amount paid at the end of the term)
  • Spouse's pension - You can arrange for part or all of your income to continue to be paid after you die to your spouse or partner (or other beneficiary)
  • Death benefits - There are various options you can choose that will provide a benefit on your death should you die before the end of the term
  • Inflation - Your income can increase each year to protect against inflation. You can choose a fixed percentage (say 3%) or an index i.e. Retail Price Index (RPI)

Have a commitment free chat with a Pension Specialist

Call us on 0800 032 9301

TextDirect: First dial 18001

Lines open: 8.30am to 6pm Monday to Friday. We may record and/or monitor calls for training and audit purposes.

Start your conversation with a pension specialist today by telling us about:

  • Your current pension pots
  • Any contributions you're making
  • How much you've already saved