Optional extras choices and restrictions

Whether you choose a conventional or a unitised annuity, there are several choices to be made: payment frequency (monthly, quarterly, yearly); guaranteed period (0, 5 or 10 years); reduction on death of the annuitant (0%, 33%, 50%, 67% or 100%). We will need to discuss these options with you in more detail.

Guaranteed period. In this case the annuity provider guarantees to pay the full pension income up to the end of the chosen guarantee period (5 years is typical) even if the annuitant dies before the end of that period. After the guaranteed period, the annuity continues to be paid at the agreed rate, but if the annuitant dies, the annuity dies with him or her.

Spouses or dependants pension. You can choose for a proportion of your pension income to continue to be paid to your spouse or dependant after you have died (50% being common, though you can go up to 100%).

Overlap. If you had a guaranteed period and spouses pension, and you died before the end of the guaranteed period, you can opt for the spouses benefit to begin after the guaranteed period (without overlap), or for the spouses pension to begin immediately on death within the guaranteed period (with overlap).

Increasing pension income. You can choose to have increases in your pension each year, either fixed (typically 3-5%) or in line with inflation (the retail prices index).

Each extra feature will reduce your starting income, for example:

Restrictions. If you have plans with DSS/contracted out money certain rules apply to how you purchase an annuity.

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