You have a number of options to choose from to make sure the income you get for the rest of your life meets your needs and the needs of those who are financially dependent on you.
It's important to consider your choices carefully because once the plan is set up you can't cash it in or make any changes.
The other point to think about is that adding more options generally reduces the amount of income that you get initially.
You can choose:
- how often the payments are made to you - this could be monthly, every three months, every six months or every year;
- when your payments will start - you can have them paid in advance so you'd get the first payment as soon as the annuity was set up, or in arrears where the first payment would be made one 'payment period' after we set up your annuity. For example, if your payments are to be made monthly, the first payment would be one month after your annuity was set up;
- for your income to increase each year by a fixed percentage up to 8.5% per annum;
- for your pension to keep pace with inflation by changing in line with the Retail Prices Index (RPI). Be aware that RPI can go down as well as up so your income could go down;
- to provide for your wife, husband or civil partner who would still get an income if you died before them;
- to provide for your children too, usually until they're 23 years old;
- to provide for another adult who is financially dependent on you, or a child with special needs. We may be able to help you set up an income for them if you die first;
- to guarantee that your payments will be made for a set period of time. This means that if you die within that time, payments will continue to the end of the guarantee period. You can choose a guarantee period of up to 10 years for an ordinary pension fund (this will be the value of payments made by you or your employer). If your pension fund includes protected rights money, the maximum guarantee period for this part of your fund is 5 years.
If your pension fund includes protected rights, this part of your pension must continue to be paid to your husband, wife or civil partner upon your death at half the rate payable when you were alive.
Think carefully about the choices you make because once you've bought this plan and the 30 day cancellation period has expired, you can't change any of the options and you can't transfer to another provider.
The income you get will be guaranteed, although if you have chosen annual changes in line with RPI then there is a chance the amount of your income could go down. If inflation falls below zero and becomes negative, your income will go down by the same amount.
