With Profits Pension Annuity - The basics

• You can buy our With Profits Pension Annuity with the proceeds of any registered UK pension scheme (excluding any benefits arising from contracting out of the earnings related part of the State Pension Scheme) as long as the rules allow this, subject to a minimum premium.
• A with profits pension annuity will provide you with a regular income for life.
• It allows you to share in the long-term growth potential of a With Profits investment during your retirement, but the level of income could be lower than a non profit pension annuity.
• The income from your With Profits Pension Annuity is likely to change from year to year, but is guaranteed not to fall below a minimum level. However, you must consider whether you can afford to take the risk that your income may go down, especially if you will be depending on it to maintain your standard of living.
• You are normally eligible for this type of annuity as long as you're aged between 50 and 75 (the minimum age will be increased to 55 on 6 April 2010). You can find out about other eligibility criteria here.
• We offer you a range of payment options so you can choose those that suit you.
• Annuities are complex products and it is always advisable to seek financial advice about your options before purchasing one. Please view the risks associated with this product.

Your options

There are a number of payment options available:

1. Guarantee Period You can guarantee that your income is paid for a minimum period even if you die.
2. 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.
3. Dependant's Pension This allows you to provide for your surviving partner if you are unmarried, or not in a civil partnership.
4. Anticipated Bonus Rate (ABR) The main factor that determines the starting level of your pension is the ABR. The ABR is a mechanism that allows you to exercise your own judgement as to the likely future level of bonus rates, and to use this to choose an ABR that will help you to achieve your desired pattern of income payments - level, increasing or decreasing.
5. 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. 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 an annuity, the amount of income you will receive (annually) will depend on a number of factors, including:

• the size of your pension fund
• future bonus rates, which are not guaranteed
• the level you set your ABR at
• your age and sex
• 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 an annual income of £1,000 payable in arrears. The lines that follow give an indication of the impact of choosing the various options.

Source: Legal & General January 2008.

The figures given in the table are for illustration only and may change at any time.

The charges

We will apply a charge to meet our expenses for administration, investment management and, where applicable, any commission we pay to your financial adviser.

In the case of our With Profits Pension Annuity, the charge will be considered at the outset and reviewed each year. The level of charge could change and will be reflected in future bonus declarations. This could affect the level of income you receive each year.

Risk factors

• With profits pension annuities are very complex and you must seek financial advice before buying one.

If you have an Independent Financial Adviser (IFA), you should contact them to discuss your needs. If you don't have an adviser and want to get in touch with one local to you, then go to Get advice.