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Pensions and Retirement Glossary

Our pension and retirement jargon buster

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A

Annuitant
An annuitant is the person(s) taking out an annuity.
Annuity
An annuity is a retirement product that pays you a guaranteed level of income for a specific period of time or your lifetime.

B

Beneficiary
A beneficiary is a person(s) who receive(s) money upon the death of the annuity’s contract owner or annuitant. The contract owner decides who the beneficiary will be ahead of their death.

E

Enhanced Annuity

An Enhanced Annuity is a type of Lifetime Annuity offered by some insurance companies/annuity providers. An Enhanced Annuity may offer a higher annuity rate (and therefore a higher income) than a standard Lifetime Annuity, if you meet certain criteria which could shorten your life expectancy.

The criterion could have things such as:

  • You are/have been a smoker and/or
  • You’re overweight and/or
  • You have spent a significant part of your working life in a hazardous environment
  • You have a terminal/life threatening illness

You may be asked additional questions before you are offered an Enhanced Annuity rate. The annuity rate that you are offered is based on the average life expectancy for people meeting the above criteria.

F

Fixed Term Annuity
A Fixed Term Annuity is a retirement product that pays you a certain level of income for a specific period of time. The time period usually would range anywhere between 3-30+years.

G

Guarantee Period
A Guaranteed Period is an option to ensure that a minimum number of year’s payments are made by the annuity, even if you die. The maximum guarantee period is 30+ years. If you die during the guarantee period, the annuity will continue to make income payments until the end of the selected guarantee period or you could select that the remaining payments are paid as a lump sum.

I

Impaired Life Annuity
An Impaired Life Annuity is a type of Lifetime Annuity offered by some insurance companies/annuity providers that are designed for people that suffer from, or have suffered from, a medical condition that results in a reduced life expectancy.

To qualify for an Impaired Life Annuity, you will need to complete a questionnaire on your medical history. The annuity provider may also ask for further information from your doctor and/ or ask you to attend a medical examination. The annuity rate that you’re offered is based on an estimate of your personal life expectancy calculated using the medical information supplied.

J

Joint Life Annuity

You can normally choose whether to set your annuity up on a Single Life or a Joint Life basis.

  • A single life annuity is just for you and will normally stop paying out income when you die, though payments may continue for a limited time if you’ve chosen a guarantee period.
  • A joint-life annuity provides you with an income for life, but then transfers to your spouse, partner or any other chosen beneficiary when you die and pays them a regular income for the rest of their lives. Or it can be used to pay income to your dependent child, usually until they're 23.

L

Lifetime Annuity
A Lifetime Annuity is a type of retirement income product that you buy with your pension pot. It guarantees you with a regular retirement income for life. Lifetime annuity options and features vary and your choice will depend on your personal circumstances, your life expectancy and your attitude to risk.

V

Value Protection
This is a way of protecting the value of your annuity should you die earlier than expected. In the event of your death the annuity provider will return any unpaid income to your beneficiaries as a lump sum. This may be tax free if you pass away before age 75, if after 75 the lump sum will be taxed at your beneficiaries marginal rate of tax.
Variable Annuity
A Variable Annuity is a type of annuity in which the account balance may fluctuate based on the value of underlying investments such as stocks and bonds. The contract owner has the ability to allocate money among several available investment choices. The contract owner, not the insurance company issuing the contract, assumes investment risks.