Non Profit pension annuity
Your options
There are a number of payment options available:
- Level Income This will pay you the same amount of income for the rest of your life. The gross amount will never change and so will not allow for the effects of inflation. What you can buy with this amount is therefore likely to fall over time.
- Increasing Income This pays you an income that increases every year. You can either choose a fixed yearly increase or link your income to the cost of living through the Retail Prices Index. Whichever you choose, at outset your income will be less than if you had chosen a level income, but this option can help to maintain a standard of living over the longer term.
- Guarantee Period You can guarantee that your income is paid for a minimum period even if you die.
- Spouse's or Civil Partner’s Pension You can make provision for your spouse or registered civil partner by building in a spouse’s or civil partner’s pension, which can be payable immediately on your death or after any guarantee period has ended.
- Dependant's Pension This allows you to provide for your surviving partner if you are unmarried, or not in a civil partnership.
- Payment Frequency You can choose to have your income paid to you every month, every three months (quarterly), every six months (half yearly) or once a year (annually). Payments will be made either in advance (at the start of the payment period) or in arrears (at the end of the payment period).
When you buy your annuity, the amount of income you will receive will depend on a number of factors, including:
- the size of your pension fund
- the prevailing investment market conditions
- your age and sex
- your postcode
- the options you choose.
Examples of payment options
The table below shows how your options could affect your income. The figures are based on a married man aged 65 exactly with a wife aged 62. The first line shows a monthly income of £1,000 payable in arrears. The lines that follow give an indication of the impact of choosing the various options.
| Guarantee period (years) | Increases in payment (%) | Spouse's pension (%) | Starting level of income (£) |
|---|---|---|---|
0 | 0 | 0 | 1,000 |
5 | 0 | 0 | 996 |
10 | 0 | 0 | 985 |
5 | 3 | 0 | 716 |
5 | 5 | 0 | 564 |
5 | 7 | 0 | 433 |
5 | 0 | 50 | 899 |
5 | 0 | 67 | 872 |
5 | 0 | 100 | 825 |
5 | 3 | 50 | 619 |
5 | 3 | 67 | 593 |
5 | 3 | 100 | 549 |
5 | RPI | 0 | 645 |
5 | RPI | 50 | 548 |
5 | RPI | 67 | 523 |
RPI = Income linked to the Retail Prices Index (inflation).
Source: Legal & General January 2008.
The figures given in the table are for illustration only and may change at any time.
