Fixed term annuities
Receive a guaranteed income for a specified term
So, what is a Fixed Term Annuity?
Let's explain...
- A fixed term annuity pays a guaranteed income for a specified term, at the end of which you'll be paid a guaranteed amount (called a maturity value), which is agreed when you take out the product.
- This 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.
Overview
Sound like something you'd be interested in?
- Uses all or part of your pension to buy a guaranteed income for any term, from as little as 1 year to 40 years; commonly, people choose 5 or 10 years.
- You could keep the rest of your pension fund invested, which means it may continue to grow while you get an income from your annuity.
- You have the option to add on death benefits and increase income in line with inflation to keep up with increasing costs.
Fixed term annuities important information
Here's what you need to know
Advantages
- It gives you a guaranteed income for a fixed period of time, while knowing how much money you'll be left with at the end
- You can protect your income by taking out death benefit, which continues to pay an income to your partner or spouse after you die, or pays out a lump sum
- Buying a fixed term annuity gives you the security now with the option of buying another annuity at a later date should rates improve or your circumstances change
- You can protect your income against inflation, choose a fixed percentage (say 3%) or an index i.e. Retail Price Index (RPI)
Disadvantages
- Whilst rates are relatively low at the moment, there is a risk they could get lower
- Changes in legislation or tax rules could be disadvantageous
- Potentially better investment returns available elsewhere
- If you cash in your annuity before the end of the term you may get back significantly less than the guaranteed value
- 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)
Tools and Calculators
Handy tools to support your planning
Annuity Calculator
Using today's rates our calculator can give you a snapshot of the income your pension savings could buy you in retirement. You can also choose to add your health details to personalise your quote even more!
Pension income calculator
You don't have to buy an annuity to get an income in your retirement. Our pension income calculator will give you a quick overview of the other options you could consider.
State pension Age
Looking for your state pension age and what you can expect to get? Our friends at Gov.uk have you covered.
Advice or guidance
What's the difference between advice and guidance
Advice is given by a professional adviser such as IFAs, financial planners, wealth managers and pension specialists. Advice is regulated by the FCA, protecting you from negligent advice and will give you tailored recommendations for your individual circumstances and ensure that the best option or combination of options for your circumstances is found, even if this goes against what you originally thought to be the best decision for you. Taking advice usually costs money.
Speak to one of our friendly advisers today and see how we can help you find the best income for your pension. We can:
- Give advice on all types of pensions
- Maximise your pension income
- Help you make the best possible use of your hard earned savings.
Guidance gives a general overview of the options available on the market for free by highly trained specialists. Guidance services won't tell you what to do with your money and you will need to research the market to find the right products and providers to suit your needs and preferences. There's no protection available, but taking guidance is a good place to start to help you understand the various choices available.
For guidance on your defined contribution pension we recommend visiting Pension Wise, a free government service from MoneyHelper, offering impartial guidance on your pension options.
To book an appointment call 0800 138 3944, 9am to 5pm Monday to Friday, visit their website, or email at [email protected].
Pension Wise won't recommend any products or tell you what to do with your money.
Financial advice
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