Like any financial product, there are benefits and risks involved – please consider them all before recommending our Pension Annuity product to your clients.
It’s been designed for clients who:
- Want a guaranteed, life-long income.
- Want a regular income.
- Want to access 25% of their pension fund in tax-free cash, although they don't have to take this.
- Would like the option to see that income increase, year on year, from the outset, either in line with inflation or at a fixed rate.
- Would like the option to provide a guaranteed, life-long income to a spouse or dependant after their death.
- Could explore the impact of health and lifestyle factors such as a heart attack, stroke, diabetes, or any other serious medical condition that could affect their, or their dependants’ life expectancy.
It’s unlikely to be suitable for clients who:
- May want to change the level of their regular income, as circumstances change over time.
- Don’t understand the impact of inflation, which erodes the purchasing power of this product.
- Want a health or lifestyle condition to be taken into account, but cannot provide medical evidence supported by a doctor.
- Belong to a defined benefits company scheme or want to carry on paying money into their current pension scheme.
- Want greater flexibility over the level of income and are willing to accept the additional risk this may involve.
What you need to think about:
- Does your client want more flexibility than this product can offer?
- How much is their pension fund worth?
- Does their policy have guaranteed annuity options?
- Do you need to explore your client’s health, or their dependants’ health in more detail?
- Do your clients understand the implications of fixing an income for the rest of their lives?
- Does your client understand that the total income received may be less than the amount used to buy the annuity?
- Does your client realise the importance of accurate medical information, and that we could reduce income to standard rates if a condition isn't supported by a doctor?
- Depending on what options your client chooses, they may receive a smaller income or may not be able to benefit from some of the other options.
- Income drawdown
- Other Open Market Option