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Annuities |
Capped Drawdown |
| Eligibility |
You need to have a pension fund.
Available to Standard Life and non-Standard Life customers. For non-Standard Life customers, you need to
have between £5,000 and £500,000 in your fund. There are no limits for Standard Life customers.
Normally you need to be at least 55.
If you're in ill health and this impairs your life expectancy you may qualify for an impaired life annuity - this will enhance your annuity income.
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You need to have a self invested personal pension (SIPP). You may be able to transfer your pension
to a SIPP, but this might not be right for you. If you have any questions contact your financial adviser or contact us directly on 0845 272 8810 (call charges will vary).
Available to Standard Life and non-Standard Life customers but you need to
have at least £50,000 in your pension fund.
Normally you need to be at least 55.
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| Tax-free lump sum |
Typically offers the option of up to 25% of your fund
being taken as a tax-free lump sum.
You’ll have to take your tax-free lump sum and your annuity at the same time.
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Offers the option of up to 25% of your fund being taken as a tax-free
lump sum.
You can take your lump sum in one go or in stages.
You also don’t need to take your pension income at the same time if you don’t want to.
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| Investment risk |
An annuity provides you with a guaranteed income for the
rest of your life.
This means your money is no longer invested, so when you take out one of our annuities, this carries no
investment risk.
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Your money remains invested which means that
there is a risk that your investments don’t perform as required.
As with any investment the value of your fund can go up or down and may be worth less than what was paid in.
You can choose where you invest your money to suit your attitude to risk
You’ll need to actively manage your SIPP to be sure your
investments are on track. That means being confident in your own investment skills, or having access to a
financial adviser.
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| Charges/costs |
All our charges and expenses are deducted before your level of pension is decided. No further charges or expenses will be taken from your pension. |
The charges you pay for income drawdown depend on the investments you make.
You may be able to reduce admin costs by consolidating your investments into a SIPP with one provider.
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| Income flexibility |
Once you decide on your annuity, you won’t be able to make further changes. This means you need to be comfortable with the choices you make.
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You can stop, start and change your income
levels at any time, depending on your available funds and HMRC limits.
You can also decide to buy an annuity at any time if you prefer the
comfort of guaranteeing your income.
You can continue paying into your pension fund even after you’ve
started taking an income.
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| Death benefit options |
Unless you specifically buy an annuity that includes an income after you die, your annuity will stop on
death.
If you choose an annuity that includes an income after you die, it will reduce the regular payment you
receive.
You can also choose an annuity that guarantees payments for up to 10 years so if you die before that period finishes the payment will continue until then before stopping. this will reduce your initial income.
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With income drawdown, any pension funds
remaining on death will be available to your dependants to take as an income or use to buy an annuity.
It can also be converted to a lump sum (taxed at 55%).
If you have a spouse or civil partner your fund must be used to
buy an income for them.
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| Taxation |
Typically you can take up to 25% of your fund as a tax-free lump sum.
Any income you receive from an annuity will be subject to tax.
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You can take up to 25% of your fund as a tax-free lump sum.
Any income you take from
the remaining fund will be taxable.
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| Benefit Flexibility |
Depending on the size of your fund you can decide how often payments are made, and when they start.
You can use your annuity to provide an income for your dependants when you die.
Annuity payments can be in advance – so you start receiving an income as soon as the annuity is set up –
or in arrears – after your chosen payment interval.
You can choose to have your income increase by a set percentage every year. Or you could tie your
annuity to the Retail Prices Index, although you need to be aware that this index can go down as well as up,
therefore the level of your income can fall as well as rise.
Once your plan is set up, you
won’t be able to make further changes or transfer to another provider.
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You choose how and when you access your money,
either as a lump sum, an income, or both.
You can change your income levels at any time.
If
you’re taking an income, you can stop and buy an annuity at any point.
You can use your pension fund to provide for loved ones after your
death.
Because your money is still invested, there’s always the risk the value of your investment could go down as well as up. This means you might get less income than you would with an annuity. It’s always worthwhile making sure you have enough money invested. Normally you need to have at least £50,000 in your pension pot to take income drawdown. The amount of income you can take will depend on the value of your pension, so it's important to regularly review your investments and their value to ensure that your pension stays on track.
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| Investment control |
Your money is no longer invested with an annuity, so you won’t need to keep an eye on investments.
An annuity provides you with a guaranteed income for the rest of your life.
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With a SIPP, you can choose from a wealth of
investment opportunities, including funds, stocks and shares, property and other options.
Because of this choice, you’ll need to actively manage your investments,
and feel confident that you have the skills to do this, or have access to a financial adviser.
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| Health enhancement |
If you’re in ill-health, you may be able to buy an annuity that takes this into account.
If in ill health you may be able to access the benefits before age 55.
With an
impaired life annuity, you could receive a higher annual income.
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This is only available through an
annuity.
But if you die early you can pass on your pension fund to your dependents or your estate subject to a tax charge.
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