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Do you want to look after a loved one after your death?

An important thing to think about is what might happen to those dependent on you financially, if you were to die first. You might want to feel that they were protected so to speak; arranging for help with their bills and living expenses. There are a number of options that can help you to do this.

 

Single or joint life Pension Annuity?

Would you like an pension income to be paid to your partner or dependent if you die first? If so then a Joint Life Pension Annuity is for you. When you take this option, your partner or dependant will continue to receive an pension income for the rest of their life after you die. It's a bit different if you have a child dependant. They will get paid once they reach a certain age. This feature gives you the flexibility to choose what proportion gets paid to your surviving partner or dependant. You can make sure your retirement pension income is paid to them at the full 100% of your Pension Annuity income, or you can choose to reduce the percentage. If you make your percentage high, it will lower your income. Make sure you are clear about who your dependent is. A joint life Pension Annuity might not suit you. Perhaps your partner already has a sufficient retirement income. It's all about assessing your own circumstances. You might prefer a single life Pension Annuity. With this, once you die, the Pension Annuity ends. In this case your annual pension income would be higher than with an equivalent joint life Pension Annuity.

   

Like your Pension Annuity with a guarantee?

Your Pension Annuity already guarantees to pay you for as long as you live. However you do have an option to have it paid for a guaranteed period between 1 and 10 years, to your estate or your chosen dependent, should you die within that time.
Of course, this is less important if you have already decided on a joint life Pension Annuity.

   

Protecting your pension income over time

Inflation is a big issue currently and this will affect your retirement pension income. This means the value of your retirement pension income actually reduces the longer you live. You can opt to protect yourself and your pension income against the effects of inflation by choosing a Pension Annuity where your pension income increases over time, this is called escalation. Basically you have three options.

 

   

Level pension income (no increase)

Level pension income means you will receive the same payment amounts for life. This means your pension income will therefore be vulnerable to inflation. The longer you live, the more inflation may affect you.

 

   

Fixed increase

If you'd like to be a bit more specific about how much your annual pension income goes up by, year on year, then you can pick a percentage. Anything up to 8.5% is possible. This comes at a price. Your annual pension income will be a little lower, balanced by your protection against inflation of course. There's a chance that you'll receive more overall pension income when you look at the duration of your Pension Annuity.

 

   

RPI increase

It's possible to protect yourself by buying an Pension Annuity that rises in line with inflation. This costs a little more than an Pension Annuity with level pension income but will help you insure yourself against inflation.

   

Tax free cash

When you buy a Pension Annuity you are able to take up to 25% TAX FREE CASH of your Pensionfund the remaining amount will be subject to pension income tax. You are able to access your tax free cash and defer your regular retirement pension income. The remaining amount must be used to purchase an Pension Annuity by your 75th birthday.