Fixed Term Annuity

This is a recent development. It means that you no longer have to commit yourself to a ‘conventional annuity’ which would make a payment for the rest of your life.

You can take your tax free lump sum and the balance of your money is used to provide a guaranteed level of income for the next three years or more – in the form of a fixed term annuity.

You have some control over the amount of income you select for the term. There is a maximum amount that you are able to take. At the end of the term, you will have a guaranteed fund amount. The more income you take, the smaller the guaranteed fund amount.

You do not have to take any income if you do not want to. Once selected, you are committed to that level of income for the term.

There is no investment risk to this plan and you will not suffer the highs and lows of normal investments. Your income and your fund are a contractual guarantee and secured in a similar way to a conventional annuity.

At the end of the term you can take your guaranteed fund value and either buy another temporary annuity, you can buy a conventional annuity, transfer to a Flexi-Access Drawdown or just take the whole fund as a taxable amount.

For a cost you can select value protection. This would make an immediate lump sum payment on the death of the policy holder(s), to anyone you like (including a spouse). They receive your purchase price, minus any income that has been paid from the pot.

The benefits of fixed term annuities in the event of your death are what have made this option so popular. You can elect to provide a 100% spouses pension, so your spouse gets both your income for the rest of the term, and also the guaranteed fund amount at the end of the term, so they can buy themselves an annuity/

Please feel free to contact us for more details and some specific quotes. We would be happy to talk you through the different options.