Compulsory Purchase Annuity

You can only buy a Compulsory Purchase Annuity with the funds from a pension plan. This could be a plan you have with us already or a plan invested with another pension provider.

If you've been contracted-out of the State Second Pension (S2P) and your National Insurance contributions have been paid into your pension plan, these contributions are a separate part of your pension fund called Protected Rights. You can also use this part of your fund to purchase a Compulsory Purchase Annuity.

We'll accept the proceeds of any pension fund as long as:

• any tax-free lump sum that you want to take has already been paid to you;
• the amount being used to buy the annuity is in respect of pension rights under a pension plan; and
• the rules of the pension plan allow this kind of purchase.

Who can I buy one from?

You may have heard the term "open market option" when talking about pensions. This means that you don't have to buy your annuity from the company your pension plan is invested with. You have the right to buy your annuity from another provider who might be able to provide you with a better level of income.

You'd take any tax-free lump sum first from your other provider before transferring the remainder of the fund to us to provide you with an income for the rest of your life.

Transferring a pension plan needs careful thought and we'd strongly recommend that you get financial advice to make sure that it is the best option for you.

If you've got more than one pension fund and want to combine them to get one source of income for the rest of your life, have a look at our Immediate Vesting Personal Pension Plan.

Are you old enough?

You need to be between 50 and 75 to buy this type of annuity. If you're thinking of retiring and are around 50 just now then be aware that the minimum age will go up to 55 from 6 April 2010.